Lower interest rates: As UAE gold prices rise, small business owners, residents could give gold loans a closer look

Lower interest rates: As UAE gold prices rise, small business owners, residents could give gold loans a closer look

Dubai: More financial institutions in the UAE could launch gold-backed loan schemes, creating opportunities for SME owners and individuals to make better use of their gold and jewellery assets. Gold has been one asset that’s been holding its own through recent times, and today (January 9), to $1,878 an ounce. (In is up by nearly Dh4 a gram for 22K since January 5.) This being the case, it is felt that gold loans can be a less expensive option against the other options UAE SME owners/individuals have, especially when interest rates are likely to see more increases starting next month. It also allows them to make better use of the gold assets they are holding rather than wait for an opportune time to sell or trade up. So, rather than sell, the option is being given to borrow against the value of the individual’s gold holdings. And once the individual pays back the entire amount, the gold is returned. Until such time, the individual needs to make use of it again. Because there is collateral involved, such gold loans also tend to carry interest rates lower than on credit cards or on personal loans. “There has been much talk that