Gold traders in Dubai are offering bullion at discounted prices after escalating tensions in the Middle East disrupted flights and slowed the movement of precious metal shipments from the region’s key trading hub.
With air travel restrictions and rising security concerns, many buyers have paused fresh purchases, unwilling to absorb sharply higher shipping and insurance costs without certainty over delivery timelines. Market participants said traders are offering discounts of up to $30 per ounce compared with the global benchmark in London, as holding inventory indefinitely would mean higher storage and financing costs.
Several consignments remained stranded as of Friday, though some shipments began leaving Dubai on flights from the middle of the week, according to people familiar with the situation.
The United Arab Emirates, particularly Dubai, plays a critical role in the global bullion trade. The city is a major refining and export hub supplying gold to Asian markets and also serves as a transit point for shipments coming from Switzerland, the United Kingdom, and several African nations. However, parts of the country’s airspace have been partially closed after missile attacks linked to the ongoing conflict involving the United States, Israel and Iran.
Gold is usually transported in the cargo sections of passenger aircraft. With flights from the UAE restricted, traders and logistics companies are hesitant to move high-value bullion through land routes to airports in neighbouring countries such as Saudi Arabia and Oman, citing logistical challenges and security risks during cross-border transport.
The disruption has also started to affect supply in some markets. Renisha Chainani, head of research at Augmont Enterprises Ltd., said delays in cargo shipments have created short-term tightness in the availability of physical gold in India.
India, one of the world’s largest gold consumers and a key destination for shipments from Dubai, has so far managed the disruption because immediate demand remains subdued. Chirag Sheth, principal consultant for South Asia at Metals Focus, said the country currently has sufficient inventory after heavy imports earlier this year.
“For now, stocks are comfortable,” Sheth said, adding that the situation could become challenging if the disruption continues for several months.
Gold prices have rallied sharply this year, climbing nearly 20 per cent and staying above $5,000 per ounce. However, trading has remained volatile, and the metal faced some pressure this week as the US dollar strengthened.
Meanwhile, refiners are also facing difficulties sourcing doré, the semi-refined gold bars typically produced at mine sites. MMTC-PAMP, India’s largest precious metals refinery, sources about 10 per cent of its doré from a mine in the Middle East, but supplies have been disrupted due to the conflict.
Samit Guha, chief executive officer and managing director of MMTC-PAMP, said logistics costs for new contracts sourced from other regions have jumped by 60 to 70 per cent since the conflict began, further adding to the strain on the global bullion supply chain.
