A major announcement in Islamic finance has been sidelined by a sharp turn in market conditions. Guidelines by industry regulators now define gold-use standards for Shariah-compliant banks and asset managers. The news may lead to broad-based recalibration of the gold market; China and India traditionally exert a dominant influence. But that notion is on hold, given the freefall in the gold price since early November. Blame the Federal Reserve and the strength in the US dollar. We will eventually see Islamic financial institutions use gold more commonly in product offerings. There are also positive capital-raising implications for miners and others in the wholesale gold industry. In a twist of circumstance, many of those companies are based in top gold-producing nations outside of the Muslim world.

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