WGC Spotlights Gold’s Deep-Rooted Bond with Islamic Finance

SEATTLE (Scrap Monster):  The World Gold Council (WGC) has highlighted gold’s long association with Islamic banking in its latest Market Update. It urges banks and other institutions to launch gold-backed financial products that meet the needs of modern Islamic investors. Since 2016, WGC has been working on development of market for Shari’ah-compliant gold-backed products.

In 2018, WGC joined hands with global research agency Kantar TNS to conduct a comprehensive survey covering nearly 4,000 investors from four predominantly Muslim markets- Saudi Arabia, the UAE, Turkey and Malaysia. The survey consolidated the attitude and approach of investors towards Islamic investing and gold. Accordingly, gold was identified as an attractive asset class that could outclass other Islamic asset classes.

Despite of the slightly higher risk-profile, Islamic investors were found more attached to gold-backed ETFs as compared with traditional gold products. The survey highlights the need for development of different gold investment products that meet varied needs of investors. In accordance with the survey, gold bars, coins and high-carat jewellery are primarily viewed as long-term investments. However, gold-backed financial products including ETFs are seen as products generating short term returns.

Nearly 76% of the Islamic investors who participated in the survey were open to increasing their exposure to Islamic investments in the near future.