And the current level is 2.4 percent. Transcript. Copyright © Ltd All rights resderved. These gold find their way into Dubai after being exported or smuggled to neighbouring nations such as Uganda, Rwanda, Cameroon, Kenya, Chad and Burundi. The Sentry terms it “conflict” gold in view of armed conflict and corruption in countries such as Congo, Sudan, South Sudan, and Central African Republic. So you would expect dips in copper to find buyers in the medium term. Universal Commodity Trading (UCT) is established under the Dubai Multi Commodity Centre (DMCC), a Government of Dubai entity as a financial brokerage firm in the year 2010. The London Bullion Market Association (LBMA) recent move to check laundering and “conflict” gold by fixing some norms is being strongly opposed by at least three gold marketing centres, including India. And perhaps an AUD/JPY long, or a NZD/JPY long, could be a great trade over the medium to longer term, as we come out of this medical crisis. Prices have since moderated to USD 1,868.10 currently. India’s COVID-19 vaccine plan: What PM Modi said about vaccination process, Experts point out 'gaps' in AstraZeneca’s COVID-19 vaccine data. These gold find their way into Dubai after being exported or smuggled to neighbouring nations such as Uganda, Rwanda, Cameroon, Kenya, Chad and Burundi. Copyright © Ltd. All rights reserved. But since DMCC began investing in world-class infrastructure and services, the volume of gold traded in Dubai has been rising. DGCX commenced trading in November 2005 as the regions first commodity derivatives exchange and has become today, the leading derivatives … During the late 1980's when the Arabian Gulf cement industry was sitting over a record glut with no takers in the local market, CTC rose like a sentinel and hoisted the flag of the Arabian Gulf cement producers … If the US dollar weakens, that would further benefit the Antipodean currencies like the Australian dollar and the New Zealand dollar. Those irked with LBMA’s letter point out that DMCC’s Dubai good delivery (DGD) is better than LBMA’s system. The LBMA has said that if these countries do not meet the standards, they would be blacklisted. The LBMA move has come at a time when gold has gained over 26 percent this year with prices hitting a record USD 2,063.20 an ounce on August 6. Dubai has historically been an international hub for the physical trade of not only gold, but also many other commodities and so the establishment of the Dubai Gold & Commodities Exchange (DGCX) was the next logical step for the region and the local economy. Another interesting commodity is nickel. The bullion sector points out that the Organization for Economic and Development Cooperation, a group of 37 nations, has come up with responsible sourcing guidelines for gold and thus, the LBMA directive was not required. The Indian bullion industry feels LBMA has acted arbitrarily and it should join hands with Dubai to formulate their own standards that will be widely accepted. The Indian bullion sector is also questioning the LBMA letter on the ground that the London association is trying to implement “monopolistic policies”. JP Morgan Chase had to make a record USD 920 million settlement. The association could be either dragged to the World Trade Organisation or UK Courts, he said, adding that there are several ethical problems with the directive when it affects the trade flow of foreign sovereign nations. And as long as they keep interest rates low, you would expect that to be very good for gold, which has grown and gained in value in all of the last major financial crises that we’ve had. The association is, perhaps, acting on an advisory issued this month by The Sentry, a US-based investigative and policy body that tracks dirty money connected to African war criminals and trans-national war profiteers. The LBMA’s move could undo all that the UAE had done in the last two decades in making Dubai a gold trading hub. According to those backing DMCC, its closer scrutiny is one reason why some of its members have been removed from DGD. World Finance: So with your analyst’s hat on, what assets do you think will perform well in today’s environment? LAMAR COMMODITY TRADING DMCC was established in Dubai, UAE in 2013 and started the business worldwide, significantly in Africa, India and most countries in Asia. Both the firms declared for bankruptcy after being unable to account for large amounts of precious metal or be charged by federal prosecutors in Miami for buying USD 3.6 billion illegal gold from criminal groups in Latin America respectively. Sulayem said that LBMA had been stung by the success of DMCC, which has become a major centre to deal in slew commodities such as gold, diamonds, coffee, tea and aluminium. In fact, in terms of traders generally, they do favour volatility; so you do tend to see an uptick in trading activity whenever you get global events like these causing large swings in asset prices. World Finance: And how about currency trades? Business Insight | RBI panel proposes conversion of large NBFCs to banks; industry cautious, Ideas For Profit | Construction sector Q2FY21 review: Back in action, time ripe for bargain-hunting. US hits highest death toll since May with hospitals already full. So gold long still looks good right now – but we need to keep a careful eye on what the Federal Reserve does. HYCM was one of the first retail forex brokerages to be regulated in the UK. Explainer | COVID passport: Is airline travel going to be more difficult? DGD scrutinises reports of the management of its members, which has audit details, unlike the LBMA which seeks only a compliance report and assurance statement from its members, critics point out. First is the cartel-like control it wields over the industry imposing its discretionary brand of blacklisting without being a democratically-elected trade body. Second, Sulayem wondered if LBMA would apply the same ethical standards to its existing members and stakeholders including JP Morgan Chase, which had admitted to manipulating precious metals futures. However, the record high volatility also provides challenges. In its advisory, the Sentry said that the destination for 95 percent of the gold from East and Central Africa is Dubai, where criminal networks, armed groups and the corrupt use it for money laundering with these “conflict” gold. DMCC was not surprised by the LBMA move since a “weakened party” would employ a variety of tactics to retain its control by “any means necessary”, he said.