Last Updated : 27 February 2009 at 13:35 IST

Dubai to get Gold ETF from World Gold Council

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Commodity Online
DUBAI: It may be the season of global economic meltdown. But the hottest commodity that is attracting investor-hungry people these days is gold. Investors can now look forward to Dubai as the City of Gold in Asia may soon get an exchange traded gold fund, sponsored by the World Gold Council (WGC).

WGC officials disclosed on Thursday that the organization plans to launch a Dubai-listed exchange traded fund (ETF) in gold soon. “The gold ETF proposed in Dubai would follow Islamic investment guidelines and it will be a great source of investment avenue for investors from Dubai and other Middle East nations,” a WGC official told Commodity Online.

WGC has been chalking out plans to launch a Dubai-based gold ETF for the past one year. Now that the gold price is surging in the wake of the drastic fall in trusted investment avenues like mutual funds, bonds and stock markets, WGC is speeding up the procedures to launch the gold ETF in Dubai.

Some months back, James Burton, chief executive of WGC had announced that the Dubai listing of a gold ETF would happen in the fourth quarter of 2008.

Founded in 1987, the World Gold Council is an organisation formed and funded by the world's leading gold mining companies with the aim of stimulating and maximising the demand for, and holding of, gold by consumers, investors, industry, and the official sector.

The Gold Council has instrumental in working to lower regulatory barriers to the widespread ownership of gold products, helping to develop distribution systems and promoting the role of gold as a reserve asset in the official sector.

SPDR Gold Trust is the largest Gold ETF by assets in the world. The ETF is jointly promoted by State Street Global Markets LLC, an affiliate of State Street Global Advisors and World Gold Trust Services, LLC, a wholly-owned subsidiary of the World Gold Council.

WGC has listed the SPDR gold ETF at Hong Kong Stock Exchange.

WGC officials pointed out that the new gold ETF in Dubai will be sharia-compliant and would be marketed more widely across the Middle East’s Islamic world, as the region is a hot gold investment destination.

WGC recently said that several Middle East nations including the City of Gold, Dubai, are going to be action centers for gold investments. “We fee Middle East nations are going to witness lots of investments in gold sector. Several global companies including gold mining processing and production companies are looking at Middle East for major investments,” says Lama Al Saheb, head of marketing WGC head of marketing in Middle East.

WGC has predicted that investments into bullion industry, especially in gold and Silver sectors, will see an upswing this year, despite the global recessionary trends.

According to a WGC report, gold investment in Middle East jumped 38 per cent in 2008 compared with 2007's fourth quarter. Saudi Arabia saw a massive 300 per cent jump in investment demand, Egypt 67 per cent and other Gulf countries registered a two per cent increase.

While UAE gold jewellery sales increased by 17 per cent in 2008 to exceed Dh13.7 billion compared with Dh11.4 billion in 2007, total gold demand in the Middle East was up one per cent in the fourth quarter of 2008 compared with 2007, said the Gold Council report.