The Dubai counter sits above the London metal price
Rashid Al MarriBullion desk editorThe Dubai counter price is always above the London metal price, and the gap between the two is the cost of buying gold in Dubai rather than in London. That gap is not a fixed margin; it moves with the market, the karat and the shop. What sits inside it is the cost of refining, fabrication and the shop's own margin, and none of those are published.
The shelf and the metal inside it
One gram in Dubai, against the London price for the gold it contains.
| The same gram | In Dubai | The metal in it | Difference | Above the metal |
|---|---|---|---|---|
| 24K, one gram | AED 504.50 | AED 494.20 | AED 10.30 | +2.09% |
| 22K, one gram | AED 467.00 | AED 453.48 | AED 13.52 | +2.98% |
What the table above this page shows
The table above this page shows the Dubai suggested retail price per gram for each karat, and the London metal price per gram in dirhams. The London figure is taken from two sources, independent of each other and of the Dubai Jewellery Group page: a gold price in dollars an ounce from one source, and the dirham rate from another. The gap between the two columns is the cost of buying gold in Dubai rather than in London.
The London figure is never taken from the same page as the Dubai price, because the two must be independent for the gap to mean anything. If both came from the same place, a single error would move both numbers and the gap would lie. The table shows the gap in dirhams, not as a percentage, because a percentage is the wrong tool for a buyer who wants to know the money.
What sits inside the gap
The gap between the Dubai counter and the London metal price is made of three things: refining, fabrication and the shop's own margin. Refining is the cost of turning London-grade metal into the karats that Dubai sells, and it is a real cost that falls on every gram. Fabrication is the cost of making a piece, and it is higher for a finished piece than for a bar. The shop's own margin is the profit the shop takes, and it is the part of the gap that a buyer can negotiate.
None of these costs are published. The Dubai Jewellery Group publishes a suggested retail price per gram, but it does not break that price down into its parts. A buyer who wants to know what they are paying for must ask the shop to itemise the making charge, and even then the refining and fabrication costs remain hidden.
What the gap cannot tell you
The gap between the Dubai counter and the London metal price cannot tell you what a shop paid for its stock, what it pays on buy-back, or what its margin is. The gap is a single number, and it hides the three costs that make it up. A wide gap may mean high fabrication costs, a high shop margin, or both, and a buyer cannot tell which from the gap alone.
The gap also cannot tell you what the metal is worth to you. The London price is the price of a good delivery bar in a London vault, not the price of a bangle in a Dubai shop. The gap is the cost of turning one into the other, and that cost is real but not transparent.
The dirham's peg and the London figure
The London figure is converted to dirhams at the UAE's institutional peg, and a rate that has wandered off the peg is treated as a broken source rather than as news. The peg is a fact of the UAE's monetary system, and a source that ignores it is not a source worth reading. The dirham's rate against the dollar is checked on every run, and the London figure is only used if the rate is on the peg.
The peg means that the London figure in dirhams moves with the dollar price of gold, and the gap between the Dubai counter and the London figure is the local premium. That premium is the cost of buying gold in Dubai, and it is the number the table shows.
The band of refusal
A reading whose counter price sits outside a band of zero to fifteen per cent above the London metal is refused, and nothing is written that run. The band is not a rule about what the premium should be; it is a rule about what a plausible premium looks like. A counter price that is below the London metal is impossible, because a shop cannot sell gold for less than the metal is worth. A counter price that is more than fifteen per cent above the metal is suspicious, because it suggests a broken source or a misread page.
The band is a check on the data, not a claim about the market. If the reading is refused, the desk writes nothing, and the table is empty for that run. That is the honest way to handle a number that cannot be true.
The gap in dirhams, not percentages
The table shows the gap in dirhams, not as a percentage, because a percentage is the wrong tool for a buyer who wants to know the money. The same percentage is a different sum of dirhams on a gram and on a tola, and a buyer who thinks in percentages mistakes the size of the gap they are paying. The table shows the gap for each weight and each karat, so a buyer can see the dirham cost of buying in Dubai.
The gap is the honest unit for this question, because it is the money a buyer pays above the metal. A percentage hides that money in a single number, and a buyer who wants to know what they are paying must see the dirhams.
The gap in brief
Next question
Questions about weight and price
What is the London metal price?
The London metal price is the price of good delivery gold in London, quoted in dollars an ounce. It is the benchmark for the metal itself, before any refining or fabrication.
Why is the Dubai counter always above the London price?
Because the Dubai counter price includes the cost of refining, fabrication and the shop's margin. Those costs are real and they are not published, so the gap is the only visible sign of them.
Where does the London figure come from?
The London figure is taken from two sources, independent of each other and of the Dubai Jewellery Group page. A gold price in dollars an ounce from one source, and the dirham rate from another.
What is the band of refusal?
A reading whose counter price sits outside a band of zero to fifteen per cent above the London metal is refused. A price below the metal is impossible, and a price too far above it is suspicious.
Does the gap include the making charge?
No. The making charge is added on top of the suggested retail price, and it is not included in the gap. The gap is the difference between the suggested retail price and the London metal price.
A position on gold that never goes on a scale
An FxPro account deals in the price of gold rather than the metal: nothing is weighed, nothing is delivered and no making charge is added, because there is no piece to make. It is a different proposition from buying at a counter, and worth understanding as one before it is mistaken for the other.