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The UAE’s precious metals market, which includes gold, jewellery, bullion and silver, was worth AED8.52 billion in 2020 and is expected to reach AED13.21 billion ($3.6 billion) by the end of the decade. This projected growth is based on a projected CAGR of 3.7% through 2030.
Bas Kooijman, CEO and asset manager at DHF Capital SA, explained the factors driving the country’s upward trajectory.
Kooijman explained: “Gold’s strength as an asset is unrivaled, and this is a key reason why astute investors make sure to diversify their portfolios by at least 5-10%. With the right partner, investors can rest assured , the gold they buy and store in a safe but accessible place – always liquid. Over time, the value of gold increases automatically, but not in quantity; this means that simply investing in gold doesn’t Outperform the market’, but not having it prevents you from hedging during periods of high inflation or when the market crashes.”
The UAE leads the Middle East in gold consumption, and the country’s jewelry industry has played a major role in this achievement. Last year, consumers across the country bought a cumulative 46.9 tonnes of gold; a 38% increase over 2021.
Indian investors
Indian investors and residents have helped lead the development of the gold industry in the region, as it is an asset with historical origins dating back to 4000 BC; the perception that gold is the safest investment is one that Indians live by, So they buy gold to hold and transfer.
About 2.8 million Indians live in the UAE; these expatriates make up more than 27% of the population. The country has the largest non-resident Indian (NRI) population in the world, with approximately 7.6 million Indians across the Middle East. The purchasing power of the region’s gold industry is evident as demand grows 150% year-on-year from 2022 to 190.4t, outpacing regions such as Europe and the Americas. However, this is not the only factor contributing to the projected growth by the end of the decade.
While jewelry is the largest single driver of physical gold globally, gold’s value lies in its established maturity as one of the world’s oldest financial instruments and its proven status as a long-term commodity.
Demand for the precious metal will continue to be strong in a world of increasing digitization and turmoil abroad causing many currencies to fluctuate and even collapse.
gold market forces
Kooijman added: “Most people don’t understand the power of the gold market, despite the fact that this asset is vital to the world economy and has shown an ability to appreciate far beyond industrial use. Like real estate, gold has been a valuable asset throughout history. Standard – but not depreciating like mortgage tax breaks or property maintenance costs.Modern assets are already in the form of cryptocurrencies, but when it comes to investing and storing precious metals, the adage ‘old is gold’ goes without saying, 2021 This notion is reinforced by the total annual gold transaction value of more than AED 275.25 billion.”
As the value of gold is linked to supply, demand and market sentiment rather than political or economic stability, recent government-led campaigns have been launched to further cement Dubai’s reputation as the “City of Gold”. — trade arab news agency
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