The ongoing escalation of the Middle East conflict has plunged Dubai, a global hub for gold trade, into a logistics dilemma. A large amount of physical gold is being held up locally due to flight disruptions, forcing traders to sell their inventory at discounted prices.
According to informed sources, many buyers have suspended new orders due to a sharp rise in transportation and insurance costs and the inability to guarantee timely delivery. To avoid ongoing storage and capital occupation costs, Dubai traders are currently selling gold at a price discounted by up to $30 per ounce compared to the London international benchmark price.
For Asian buyers, this logistics disruption has brought direct impacts. Samit Guha, CEO of Indian precious metals refiner MMTC-PAMP, stated that since the outbreak of the conflict, logistics costs have surged by 60% to 70%. However, due to large import volumes in January and relatively low recent demand, physical supply remains sufficient in the short term.
<h2>Dubai's Airspace Closed, Gold Freight Stalled</h2>
The UAE is one of the world's most important centers for gold refining and re-export trade, also serving as a transit hub for gold from Switzerland, the UK, and several African countries to Asian buyers. In 2024, the UAE's total gold imports reached 1,392 tons, valued at over $100 billion.
However, Iranian missile strikes have led to partial closures of UAE airspace. The conflict between the US-Israel and Iran has now entered its seventh day, with no signs of easing. Since gold is typically transported by air freight, the large-scale restrictions on flights have directly cut off this major transportation route.
Even so, traders and logistics companies are reluctant to switch to land transport. Transporting high-value goods overland through countries like Saudi Arabia or Oman to other airports involves numerous risks and complex procedures related to cross-border customs, making it less feasible.
<h2>India's Short-Term Inventory is Ample, but Risks Remain</h2>
As one of Dubai's largest gold buyers, India is currently feeling the pressure of this logistics disruption. Renisha Chainani, research director at Augmont Enterprises Ltd., stated, &#34;Multiple shipments have been delayed or held up, leading to a tightening of the short-term supply of physical gold in India.&#34;
However, analysts believe that Indian buyers still have some leeway. Chirag Sheth, chief consultant for South Asia at consulting firm Metals Focus, stated that supported by large imports in January, current market inventories are sufficient, and recent demand has been relatively subdued, allowing buyers to wait. But he also warned: &#34;Currently, inventories are ample, but if this situation persists for several months, there will be real problems.&#34;
Data shows that India's gold discount has changed significantly due to this transportation bottleneck, with the gold discount narrowing, reflecting market expectations of tightening physical supply.
<h2>Refiners Under Pressure, Raw Material Supply and Costs Both Affected</h2>
This conflict has also impacted the upstream of the supply chain. India's largest precious metals refiner, MMTC-PAMP, sources about 10% of its ore gold (i.e., semi-refined gold bars directly produced from mines) from a mine in the Middle East, and this supply has now been disrupted
Samit Guha stated that if new contracts are signed with other sources, logistics costs have surged by 60% to 70% since the outbreak of the conflict.
This means that even if refiners manage to source raw materials from other channels, cost pressures have significantly increased and may gradually be passed down to downstream.
<h2>Gold prices fluctuate at high levels, market closely watches the situation</h2>
Since the beginning of this year, spot gold has risen nearly 20%, stabilizing above $5,000 per ounce. However, this week, gold prices have been affected by a stronger dollar, leading to volatility and downward pressure.
The current core focus of the market is whether the situation in the Middle East can be alleviated in the short term. If flight restrictions continue, the logistics bottleneck in Dubai will gradually evolve from a discount signal to a real supply shortage, which will have a more profound impact on the prices in the Asian physical gold market.
Risk warning and disclaimer
The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial conditions, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at their own risk

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The escalation of the Middle East conflict has led to logistical difficulties for gold in Dubai, with physical gold being held up and traders selling at discounted prices. Transportation and insurance costs have surged, and buyers have paused new orders. Dubai gold traders are selling gold at a maximum discount of $30 per ounce. The UAE has a large volume of gold imports, but flights are restricted due to missile attacks from Iran, causing transportation disruptions. India, as a major buyer, has sufficient short-term inventory but faces risks of supply tightness

- The ongoing Middle Eastern conflict is disrupting logistics in Dubai, a key global gold trade hub, leading to significant delays in physical gold shipments.  
- Traders are forced to sell gold at discounts up to $30 per ounce due to rising transport and insurance costs and suspended new orders from buyers.  
- If the situation persists, the supply bottleneck could evolve into a real shortage affecting gold prices in the Asian physical market.

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The situation in the Middle East worsens, and gold stranded in Dubai is being sold at a discount