Dubai Launches Program to Raise Standard of Gold

The Dubai Metals and Commodities Centre (DMCC) is launching a program for the gold industry aimed at improving the standard of gold produced along with strict criteria for refiners.

 

The DMCC believes the Dubai Good Delivery Standard (DGDS) will improve the tradability and distribution of small gold bars.

The DGDS will serve to guarantee the production of high quality gold with a minimum purity of 99.5 percent in the regional market and will spell out the delivery requirements for the Dubai Gold & Commodities Exchange (DGCX) which is to be launched in the near future

The target of the new DGDS is to reach the London Good Delivery standard for the London Bullion Market which is the internationally accredited delivery standard. A gold bar for the London market must weigh between 350 and 430 ounces with a minimum purity of 99.5 percent.

To be part of the DMCC's Dubai Good Delivery list, refineries will have to show high levels of creditworthiness, strong financials, operational proficiency and high-level production procedures.

In addition, the gold bars will have to be produced according to specifications regarding weight, fineness, appearance and marks.

The Dubai Good Delivery list has two categories for members. One covers refineries listed on the London Bullion Market Association Good Delivery, while Category 2 covers other global and domestic gold refineries who meet all the DMCC's listing stipulations.

Meanwhile, the Indian partner in the Dubai Gold and Commodity Exchange said the exchange could rise swiftly to be one of the world's top exchanges within five years.

The comments were made by Jignesh Shah, managing director of Multi Commodity Exchange of India Ltd (MCX). The DGCX, due to start operating in the second half of 2005, is a joint venture between the DMCC, MCX and Financial Technologies (India) Ltd (FTIL), of which Shah is chairman.

An agreement was signed last year to create the Dubai exchange. Dubai is a major player on the international gold market and is seen as providing a gateway to India, where 700 tons of gold are consumed annually. Dubai is a hub for 10 percent of the global gold trade but local officials want to see that figure raised to 50 percent.

The first contract to be listed on the Dubai exchange will be gold, followed by other contracts, including silver, steel, freight, cotton and energy. "Nothing can stop Dubai becoming like Hong Kong when China was becoming liberalized," Shah said.