Dubai: Hand-carried gold challenges to be addressed with better regulations, surveillance

The World Gold Council (WGC) will work with Dubai to tackle challenges associated with hand-carried gold. Andrew Naylor, head of Middle East and Public Policy, WGC, told Khaleej Times that gold transported in the hand luggage of passengers poses specific challenges like “risks related to the legitimacy of the gold's origin, potential for financial crimes, and compliance with international standards”.

The council — which recently opened a new office and regional headquarters for the Middle East in the Dubai Multi Commodities Centre (DMCC) — had last year announced a project to address the challenges posed by the illicit trade of hand-carried gold.

“Alongside the DMCC, we plan to address these issues by enhancing regulatory frameworks, improving surveillance and enforcement mechanisms, and promoting strict adherence to due diligence practices. These efforts aim to ensure that gold trading globally is conducted responsibly and in line with global best practices,” said Naylor.

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There is no accepted standard when it comes to passengers carrying gold bars, coins and jewellery in their luggage. While some countries impose limits on how much yellow metal can be carried, others require travellers to declare them.

Announced in November 2023, the council’s project is set to “strengthen and standardise international regulations and procedures, addressing a crucial gap in the responsible sourcing and trade of gold”.

The project aims to result in a set of policy recommendations that will address the forms of gold that can be hand-carried, definitions of acceptable personal limits, and the establishment of standardised customs declaration and digital tracking processes.

Ahmed bin Sulayem, executive chairman and chief executive officer, DMCC, had said then that stricter measures on hand-carry gold are an “urgent priority”.

Retail gold principles

As it announced the opening of its new office in Dubai, the WGC said it has signed an agreement with the DMCC to advance the gold industry within the UAE. It includes implementing the council’s retail gold investment principles in Dubai.

The voluntary framework — which has been launched in several markets around the world including India, Germany, Singapore, and the US — ensures gold sellers around the world adhere to a set of universal, best practice principles “that will help customers feel confident and trust in the gold they invest in”.

“These voluntary principles work side-by-side with our Gold Guidance to help the investor differentiate between providers, understand which products are the most suitable for them and ultimately equip them with the knowledge they need to responsibly invest in gold.

“The ultimate goal is to foster a gold investment landscape in the UAE that is resilient, sustainable, and aligned with the best interests of both the industry and its participants,” said Naylor.

Safe haven asset

Referring to Dubai as a city with a deep-seated cultural affinity for gold, Naylor said the metal is considered a “safe-haven asset, offering portfolio diversification, long-term returns, and a source of liquidity”.

“The prospects for gold investment in Dubai remain robust, supported by strong market infrastructure, extensive trading networks, and a stable investment environment. Investors in Dubai are well-positioned to capitalise on the intrinsic and enduring value that gold offers, especially in times of economic uncertainty,” he said.

Gold prices hit record highs in the UAE last Thursday, with the 24K variant of the precious metal trading at Dh266.75 per gram as compared to Dh261.75 the previous day.

Market research

One key area for the council is conducting gold market research in Dubai. This entails analysing various facets of the market, including demand and supply dynamics, investment trends, trade flows, and regulatory landscapes.

“Through working with our partners, the research will focus on understanding the unique attributes of the UAE and regional gold market, consumer perceptions of gold, the role the UAE and the region plays in the global gold market, identifying opportunities for growth, and addressing potential challenges. This endeavour will provide valuable insights that can inform policymaking, enhance market efficiency, and foster sustainable development in the gold sector.”

According to Naylor, the council’s new office in Dubai signifies a strengthening of the gold industry in Dubai and the UAE as a whole. It will lead to “enhanced global market integrity, increased innovation, and greater investment in the gold sector within the region”.

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