One-kilo gold bars are displayed inside a secured vault in Dubai- Reuters
DUBAI – 20 August 2017: The Dubai Gold and Commodities Exchange and Saudi Arabian conglomerate Ayedh Dejem Group plan to develop and launch the Middle East's first sharia-compliant spot gold contract to be traded on an international exchange, they said on Sunday.
"We are looking at this product to develop local markets and unlock the potential of gold trading in the region," said Gaurang Desai, chief executive of the exchange, adding that he hoped it would attract new institutional investors to trade.
Ayedh Dejem is a major transporter of fuel by road in Saudi Arabia. The statement did not give any details of the new contract or a timetable, but said global Islamic finance consultants Amanie Advisors would advise on the initiative.
Demand for gold jewelry is high in the rich Gulf Arab oil exporting countries but partly because of uncertainty about whether complex transactions in gold are religiously permissible, its use in Islamic finance has been minor.
However, the Bahrain-based Accounting and Auditing Organization for Islamic Financial Institutions, which sets guidelines followed in whole or in part by Islamic financial firms around the world, approved new standards for precious metals last November.
The greater clarity provided by these standards could spur the development of sharia-compliant financial products based on gold and silver over the next few years, analysts believe.
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