Russia becomes UAE's main gold supplier

News Desk - The Cradle 

Western sanctions following the war between Russia and Ukraine have shifted global gold markets away from London to Dubai

Russia became the UAE’s leading source of gold imports in 2022, overtaking Mali, Zimbabwe, and Ghana, amid economic sanctions on Moscow over its invasion of Ukraine.

The UAE imported 96.4 tons of gold from Russia last year, more than any other country, Bloomberg reported on 20 September, citing UN Comtrade data.

After the start of the Ukraine war, Britain, the European Union, Switzerland, the United States, Canada, and Japan all banned imports of Russian bullion. Until then, most Russian gold had been shipped to London, a gold trading and storage hub.

Russian gold producers quickly found new markets in the UAE, Turkey, and China, which had not imposed sanctions on Moscow.

This boosted the status of Dubai as a major global gold trading hub. Over the past 20 years, the UAE has become an important player in the world gold market, importing and exporting large amounts of the precious metal.

The UAE’s imports of Russian gold in 2022 comprise one-third of Russia’s annual mine production and more than 15 times the UAE’s imports from the country compared to the year before.

The Gulf state imported 75.7 tons of Russian gold from February 2022 to March 2023, compared to just 1.3 tons in 2021.

China and Turkey followed the UAE as the next biggest importers, taking in about 20 tons each during that period. According to the customs data, the three countries accounted for 99.8 percent of Russian gold exports.

Before being overtaken by Russia, Mali was the UAE’s largest source of gold imports, providing almost 16 percent of the country’s gold, valued at $7.3 billion, in 2021, according to the international trade data site Observatory of Economic Complexity (OEC). Zimbabwe, Sudan, Niger, Uganda and then Ghana followed.

In addition to blocking gold imports, western nations also seized $640 billion of Russian gold and forex reserves following the start of the Ukraine war.

This has prompted an increasing number of countries to repatriate their gold reserves as protection against the sort of sanctions imposed by the west on Russia, according to an Invesco survey of central banks and sovereign wealth funds.

The survey showed a “substantial share” of central banks were concerned by the precedent that had been set. Almost 60 percent of respondents said it had made gold more attractive, while 68 percent reported storing their countries’ gold reserves domestically, compared to 50 percent in 2020.

One central bank, quoted anonymously, said: “We did have it (gold) held in London... but now we’ve transferred it back to own country to hold as a safe haven asset and to keep it safe.”