Cost-conscious buyers will be unwilling to pay a premium for bank-branded gold bars, meaning they are unlikely to affect demand at traditional dealers, experts say.
Emirates NBD, Dubai’s largest bank by assets, unveiled Emirates NBD Gold, the UAE’s first bank-branded gold bar, for retail customers and investors.
The products are available to all customers through an Emirates NBD Gold certificate, which can be redeemed at any time. This certificate allows investors to either hold the bar with the bank or have it delivered to them anywhere in the UAE.
Customers can purchase, track and redeem the bars through the ENBD X mobile banking app, with real-time portfolio monitoring available. The product is available in a sealed 10g, 50g and 100g denominations featuring the bank logo, with each bar coming with a certificate of “authenticity and ownership”, the lender said on Monday.
Concerns over purity
“Branded gold bars from a recognised financial institution help increase transparency, quality assurance and convenience for buyers. This is especially appealing to investors and consumers who may have been hesitant about unbranded alternatives due to concerns over purity and resale value,” says Chandu Siroya, vice chairman of Dubai Jewellery Group and managing director of Siroya Jewellers.
“It could introduce competitive pressure, especially in the investment segment of the market. Consumers who are buying gold primarily as a store of value or investment might increasingly prefer branded bars, as they offer standardised quality and are perceived as easier to trade or liquidate.
“That said, unbranded gold still has a strong place, particularly within traditional jewellery markets and among customers who value personal relationships with jewellers, customised designs, or cultural purchasing practices.”
Ashish Vijay, founder and owner of Dubai-based Tiara Gems and Jewellery, says that branded gold will not have a big impact on traditional jewellers as the attached services and benefits from the bank are more premium. Jewellers have the added advantage of selling at a lower price closer to spot price, he says.
What is branded gold?
Branded gold refers to manufactured gold bars or coins of a certain standard (for example, 24K/999), stamped with the mark and name of a reputable source and is often supplied with certificates, serial numbers and stamped or sealed packaging.
For retail customers, branded gold covers jewellery from established chains, but in the context of investment, it refers to gold from established refineries, mints or banks.
Bullion has rallied 64 per cent year-to-date, breaking records along the way. Gold is not far off the record high above $4,381 an ounce set in October. The precious metal is on track for its best annual performance since 1979.
Gold rose towards a record as investors looked ahead to US inflation data and monitored escalating tensions in Venezuela. Spot gold lost 0.1 per cent to trade at $4,336.31 per ounce at 9.20am UAE time on Thursday.
In the UAE, gold, even for investment purposes, is bought from local jewellers. Various concerns arise when doing so, such as purity and resale, according to Vijay Valecha, chief investment officer of Dubai-based Century Financial.
“With ENBD’s gold, the bank now takes responsibility for sourcing certified gold and will be held accountable for ensuring its purity. This significantly reduces the execution risk and investor effort,” he says.
“Furthermore, another set of issues arises upon resale, as retail investors often get caught up in negotiations and locating an ideal dealer. However, with ENBD’s gold certificates, the process is streamlined, as investors can buy and sell through the bank. This improves liquidity, shortens transaction time, and makes it easier to adjust portfolio exposure to gold in response to market conditions or cash-flow needs.”
In terms of disadvantages, branded gold may lead to higher costs as it would include storage, management and administrative costs. Secondly, the branded gold is exclusively available to Emirates NBD customers, limiting those who can invest in this branded product, Mr Valecha says.
Meanwhile, Dhruv Tanna, associate vice president at DIFC-based investment and wealth management firm Phillip Capital, believes Emirates NBD’s branded gold bar mainly lowers friction for everyday investors by combining authenticity, custody and on-demand redemption under one regulated bank product.
It can shift some demand from traditional dealers towards bank-led, digital distribution. The real value is convenience and trust, not higher returns, he adds.
Pricing impact
Mr Siroya says that unbranded gold products may experience some pricing impact.
“Branded bars have the advantage of clarity and trust, which may allow them to command tighter spreads between buy and sell prices,” he says.
“However, the overall price of gold is still driven by global market rates, and jewellers can remain competitive by focusing on service, design value and customer loyalty. Additionally, many consumers looking to buy gold for jewellery or gifting will still choose traditional jewellery boutiques over bullion bars.”
Physical jewellers with diversified offerings and strong customer engagement should not see this as an existential threat, but rather as an opportunity to innovate and highlight their unique value propositions, he suggests.
