How to start a gold trading business in Dubai
Dubai, once famed as the ‘City of Gold’ for its historic Gold Souk, has transformed into a global powerhouse in the gold trade, reshaping its nickname into a testament of its industry dominance. At the centre of this transformation is the Dubai Multi Commodities Centre (DMCC), overseeing the entire gold value chain, from research and refining to trading and investing. In the past decade, Dubai’s gold trade has surged under the strategic investments of the DMCC, now representing approximately 25% of global trade, with the majority concentrated within its Free Zone.
This compelling synergy of infrastructure and services has positioned Dubai at the forefront of the global gold market, making it an opportune destination for entrepreneurs looking to delve into the lucrative gold trading business.
This article looks at the key steps and considerations to guide you on the path to launching a successful gold trading venture in Dubai.
Why start a gold trading business in Dubai?
Strategic Location
Situated at the crossroads of continents, Dubai provides a strategic advantage for gold traders. The city’s Gold Souk, hosting around 300 shops in just half a square kilometre, is a testament to its significance in the global market.
Gold brokers operating in Dubai leverage the extended operational hours from 6 am to 11 pm, covering every time zone from Australia to the west coast of the USA. This unique feature positions Dubai as one of the few exchanges globally that seamlessly caters to the entire spectrum of international trading hours.
Export Powerhouse
In 2021, the United Arab Emirates solidified its position as a major player in the global gold trade by exporting a staggering $32.8 billion in gold. This impressive figure makes the UAE the second-largest exporter of gold globally. Gold also claimed the spot of the third most exported product from the country during the same period.
Dubai’s gold trade is a substantial contributor to the city’s economy, with a value of 41 billion euros recorded in the first nine months of 2020, according to Dubai Customs. This places gold as Dubai’s most lucrative export after oil, showcasing the industry’s integral role in the city’s economic landscape.
Global Gold Gateway
Dubai acts as a critical passage for the world’s gold stocks, with estimates suggesting that between 20% to 40% of the global gold supply passes through the city annually. Much of this gold finds its way to the renowned Gold Souk, reinforcing Dubai’s status as a global gold gateway.
For entrepreneurs considering venturing into gold trading, Dubai’s unrivalled location, robust export performance, and central role in global gold circulation present an unparalleled opportunity.
Where to set up your gold trading business in Dubai
The first crucial step in setting up a gold trading business is choosing where to base your business and obtaining the necessary licences from the relevant authorities.
While you can set up your business anywhere on the mainland or in one of Dubai’s 20+ free zones, the jurisdictions/areas that make most strategic sense are:
- The Dubai Multi Commodities Centre (DMCC)
- Dubai Gold Souk (Mainland set up)
- Dubai Gold and Diamond Park (extension of Jebel Ali Free zone)
DMCC serves as a premier free zone and benefits from the presence of the Dubai Gold and Commodities Exchange (DGCX) and regulated trading platforms like DMCC Tradeflow, a trade finance product facilitating efficient transactions.
The Gold Souk, steeped in rich heritage, stands as a global attraction, drawing traders and buyers worldwide and offering the ideal backdrop for networking and establishing business relationships. While the Dubai Gold and Diamond Park as an extension of Jebel Ali Free Zone, provides a strategic location and logistical convenience, which may be particularly appealing to businesses with a focus on efficient supply chain management.
The choice will depend on various factors such as the type of trading activity, the required trading scope, the setup expenses, and specific business needs.
The regulatory landscape
Regulation of gold trading in Dubai is overseen by the Ministry of Economy and involves a comprehensive approach to address the inherent high risks in the sector. The regulatory framework encompasses policies and procedures aligned with the OECD’s 5-step framework. Entities within this regulation must establish a robust management system, identify and assess risks in the supply chain, implement a strategy to respond to identified risks, undergo independent third-party reviews of due diligence practices, and provide periodic reports. Reports must be submitted to the Ministry of Economy within 90 days of each review cycle’s conclusion.
Navigating customs and import/export regulations
If your company is involved in import/export, registration with customs authorities and obtaining a customs code is necessary.
The import and export of gold in Dubai are subject to stringent regulations to maintain the integrity of the global gold market. Understanding these processes is fundamental for a successful gold trading venture.
Importing gold into Dubai necessitates compliance with customs regulations. Traders must provide accurate documentation, detailing the origin, purity, and quantity of the gold consignment. Additionally, adherence to international ethical sourcing standards is crucial.
Exporting gold follows a similar process, requiring meticulous documentation to ensure transparency and traceability. It’s imperative for gold traders to stay informed about any changes in customs and import/export regulations to avoid disruptions to their operations.
Obtaining a business licence
Armed with this background information you can then obtain a trade licence. If setting up on the mainland, the application is made through the Department of Economic Development (DED). For free zone setups in DMCC or JAFZA, the application is directed to the respective free zone authority. The main distinction between mainland and free zone setups is the trading scope. Mainland companies have the freedom to conduct business across the UAE without geographical restrictions whereas free zone entities are often limited to operating within the specific free zone and may have restrictions on conducting business outside its jurisdiction. They do, however, benefit from exemptions on customs duties and simplified import/export procedures.
The documents you’ll need will vary depending on your specific trading activity and chosen jurisdiction but may include:
- A comprehensive business plan
- Passport copies of all shareholders and signatories
- Proof of initial approval
- Notarised Memorandum and Articles of Association
- Tenancy contract
- Lease agreement.
Other documents may be requested depending on your chosen jurisdiction and specific business activity. Once your business activity has been approved and you have received your trade licence, you can proceed with the application for any required visas for staff and opening a corporate bank account. You can then begin trading.
How can Global Link help?
Global Link has over 16 years’ experience working with local and global businesses, providing bespoke consultancy services for company incorporation and financial services in Dubai and the wider UAE.
We can assist you with starting your gold trading business in Dubai, navigating the intricate regulatory landscape, handling documentation such as trade licence and visa applications, ensuring compliance with gold trading regulations, and leveraging our expertise to streamline the entire setup process.
If you need advice on this or any other company incorporation, visa or PRO service, please get in touch with us on +971 4 553 9901 or email us at [email protected] and we will be happy to assist you.