Dubai Based Bank offers Gold Investment Account

A new Gold Investment Account (GIA) launched by Emirates NBD in Dubai offers customers the opportunity to buy the precious metal electronically. This GIA is the first of its kind in the region. It allows customers to own the yellow metal without needing to move or store the physical.

Customers with a savings account in U.S. dollars or UAE dirhams are eligible to buy the precious metal in electronic form. This account is designated with the currency symbol XAU and is measured in ounces.

Shekhar Krishnamurthy, the chief manager of Retail Assets and Liabilities at Emirates NBD, said the bank’s decision to offer the account is meeting a demand for people in the Middle East and the Indian sub-continent who show an affinity for the precious metal. These people believe that the yellow metal is a safe haven investment in tough economic times, Krishnamurthy said.

The yellow metal is traditionally bought in India for the festival season and as part of the bridal trousseau. This year will see the fewest number of days considered auspicious for Indian marriages since 2004. This could also be a factor in trimming demand.

According to the World Gold Council, India bought a record 969 tons in 2011. Projections by analysts, though, see precious metal purchases in India falling by seven percent this year. This would be the first drop in three years.

Indian buyers are being spooked by the rising gold rate, analysts say, making jewelry buyers and investors back off a bit on purchases.

Emirates NBD is betting that its new account will appeal to Indian customers who are shying away from buying the physical because of the high gold rate.

Krishnamurthy said the Dubai bank is seeing “a very positive initial response” from both individuals and businesses.

Entry into a this account is modest, making it affordable to nearly everyone. Investors can open a GIA for AED 500. Investors can also establish a Systematic Investment Plan to buy small units of the precious metal each month. Transactions can be made through e-banking or at a physical branch.

Investors may transfer the precious metal balance to another XAU account holder or sell their holdings back to bank. Bank statements will show holdings as Troy ounces.

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