A Dubai-based commodities exchange on Monday launched a sharia-compliant tradeable security backed by gold, the first of its kind, which will be traded on the Nasdaq Dubai stock exchange.

Investors have been rushing into gold as concerns mount over the financial sector and the global economy, pushing the price of gold above $1,000 an ounce last month.

Gold rose more than 1 percent on Monday to $950 an ounce.

Dubai gold securities, the first exchange traded commodity (ETC) complying with sharia law, are aimed at the increasingly popular Islamic finance market.

The securities were launched at an event in Dubai involving the World Gold Council (WGC), Nasdaq Dubai and the Dubai Multi Commodities Centre (DMCC).

'Dubai gold securities will establish a benchmark for investors looking for innovative solutions to invest in commodities within the framework of Islamic finance,' DMCC executive chairman Ahmed bin Sulayem said.

Each security, called 'Dubai Gold', is 100-percent backed by physical, allocated gold held in safe-keeping by an independent custodian, HSBC, the DMCC said in a statement. One share represents one-tenth of an ounce of physical gold.

HSBC will act as the primary market maker of the gold securities, which will be listed on Nasdaq Dubai.

The securities will be marketed by DMCC unit Dubai Commodities Asset Management, it said.

The gold will be stored on behalf of investors by HSBC for a fee of 0.4 percent per year.

Initially, 50,000 shares will be issued, with the issuer retaining the ability to issue up to a billion shares according to demand, daily Emirates Business reported earlier on Monday.

The WGC sponsors a number of gold-backed exchange traded funds (ETF) worldwide, accounting for about 85 percent of the market.

ETFs are listed and traded like equities, giving investors exposure to the gold market without taking physical delivery. Sponsors buy the gold and store it.

The WGC has long planned the launch of a gold ETF in Dubai, and had hoped to start it before the end of last year. The WGC is a trade group funded by gold mining companies to promote the precious metal.

Dubai has a long-established market for gold bullion and jewellery fuelled by strong demand from the Arab world and India. Dubai also hosts gold futures trading at the Dubai Gold and Commodities Exchange. - Reuters