Dubai, the region's gold trade hub, will see the launch of the Middle East's first gold exchange traded fund (ETF) in 2008, a senior World Gold Council official said on Tuesday.
"We are on track to launch gold ETFs in Dubai this year," said Moaz Barakat, managing director of the industry-sponsored WGC in the Middle East, Turkey and Pakistan.
"Our delegation from London is coming to Dubai next week to discuss it... the listing would be either on the Dubai International Financial Exchange (DIFX) or Dubai Financial Market (DFM)."
ETFs are listed on the stock exchanges and are a popular investment vehicle for the precious metal in Western economies. Investors do not need to take physical delivery of the metal as the issuers buy matching gold to keep in their vaults.
"The market here is very interested in gold ETFs and it is offering secure exposure," Barakat said.
Changes in gold and silver ETF holdings are closely watched by market participants because sharp inflows in gold ETFs could be a bullish signal as it shows longer-term retail and institutional investors are entering the market.
WGC-sponsored gold ETFs now hold more than 700 tonnes of gold worth nearly $19 billion (Dh69.7bn).
The Dubai ETFs will comply with Islamic law or sharia which bans the charging of interest, equating it with usury, and prohibits investment in businesses that trade in alcohol or gambling, Barakat said.
Dubai is a long-established market for gold bullion and jewellery, wholesale and retail, fuelled by strong demand from the Arab world and India, the world's main gold market.
The Gulf commercial hub launched the region's first gold futures exchange in 2005 as the economies of Gulf Arab nations boomed on a windfall oil income.
US-based StreetTRACKS gold shares is the world's largest gold ETF accounting for more than 80 per cent of the metal held by all such funds.
Last year's demand in the United Arab Emirates, a seven-member federation that includes Dubai and Abu Dhabi, increased by almost 12 per cent in volume and 20 per cent in value from the year before as tourism grew, WGC said on Monday. (Reuters)
First Mideast gold ETF on track