DGCX to provide pricing for gold-backed ETF on Tadawul

Albilad’s Exchange Traded Fund was listed on the Tadawul using DGCX’s Sharia-compliant spot gold contract as a benchmark index

The DGCX’s Sharia Compliant Spot Gold contract was unveiled in 2018. Ravindranath K / The National

The Dubai Gold and Commodities Exchange joined forces with Albilad Capital to provide pricing data for the company’s new Sharia-compliant, gold-backed exchange traded fund listed on Saudi Arabia’s Tadawul exchange.

The collaboration with the Saudi financial and investment company is expected to boost gold and Islamic finance markets across the region, the DGCX said yesterday.

“Historically, there has always been tremendous investor appetite for gold, particularly during times of heightened volatility, but it has not always been accessible to Islamic investment portfolios,” Les Male, chief executive of the DGCX, said.

“But with Albilad Capital’s innovative, Sharia-compliant instrument that uses reliable and real-time pricing data from the DGCX’s Sharia-compliant spot gold contract, investors can more easily own and trade the yellow metal in compliance with Islamic religious law and investment principles.”

Since the partnership kicked off at the beginning of the month, Albilad Capital has invested in 780 kilograms of gold valued at $42.67 million (Dh156.7m).

A minimum of 95 per cent of the ETF’s assets will be invested in physical gold, purchased from the DGCX market through the spot gold contract and stored in a secured vault in Dubai. The product is primarily aimed at retail investors.

“Through this partnership with [the] DGCX, we successfully listed the first commodity physically backed gold ETF in the Saudi Capital Market,” said Zaid Almufarih, chief executive of Albilad Capital.

“The listing of Albilad Gold ETF added another dimension to the development of the Saudi Capital Market, and further flavoured the regional markets with diverse asset classes in compliance with Sharia guidelines.”

The DGCX’s Sharia-compliant Spot Gold contract was unveiled in 2018, the first such contract worldwide.

The DGCX is a subsidiary of the Dubai Multi Commodities Centre, a government authority for trade, enterprise and commodities.