India's Gold Exports to Dubai Boom

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"Analysts. . .point out that the trade partnership between India and Dubai is increasingly being written in gold."

There is a newfound golden love between India, the world’s largest gold consuming country and Dubai, a top global gold trading city. Dubai which generally exports gold to India is these days importing the yellow metal from India.

In the last three months-January, February and March-of 2009, India exported nearly 10 tons of gold coins to Dubai, the City of Gold, which has several large India-based gold jewelry show rooms.

According to figures from the Bombay Bullion Association, while gold imports by India, one of the top importers of the yellow metals in the world, dipped to virtually zero levels in February and March, gold exports from India have gone up. And, thus, Dubai has emerged as the largest export market for Indian gold coins and jewelry items.

”High prices of gold has forced several gold business houses in India to export scrap gold to Dubai. In fact, turning old gold into gold coins and then selling to the Dubai market is a big business with several large gold dealers in India,” bullion analyst Mark Robinson told Commodity Online.

He says Dubai has emerged as a large export market for gold coins and gold jewelry from India. "It is a reversal of the export-import market. All these months, Dubai used to export gold to India. Now India exports gold to Dubai," Robinson added.

According to Gargi Shah, metals analyst at GFMS, the significance of India’s changed role as a major importer to exporter of gold is very interesting.

Analysts like Robison and Shah point out that the trade partnership between India and Dubai is increasingly being written in gold.

In fact, India was the top gold trading partner of Dubai for 2008. While gold trade through Dubai rose 53% to $29 billion in 2008 against $19bn in the previous year, the country that carried out the largest gold trade with the Emirates city was India.

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