Gold shipments in Dubai have been disrupted due to the ongoing conflict involving the US, Israel and Iran, leaving consignments stranded and forcing traders to sell bullion at steep discounts to clear inventory, Bloomberg News reported.
The disruptions follow the partial closure of UAE airspace amid heightened regional tensions. While some bullion shipments have managed to leave Dubai since midweek, several consignments remain delayed, creating logistical bottlenecks in one of the world's most important bullion trading hubs.
Dubai plays a crucial role in the global gold market as a major refining and export centre, particularly for shipments headed to Asia. The delays are therefore rippling across international supply chains as the conflict enters its seventh day.
Gold Sold At Discount
To move stuck inventory, traders in Dubai have begun offering gold below global benchmark prices.
Sources familiar with the matter told Bloomberg News that bullion is being sold at discounts of up to $30 an ounce below the London benchmark. The sources requested anonymity as the discussions are private.
The discounting reflects mounting storage and financing costs, with buyers reluctant to commit to purchases without clarity on delivery timelines.
Global Supply Chains Disrupted
Dubai acts as a major transit point for gold shipments originating from Switzerland, the UK and several African countries before being re-exported to Asia.
However, the ongoing airspace restrictions linked to missile activity in the region are disrupting these flows, affecting both the volume and timing of deliveries.
Impact On India
India, one of the largest importers of gold from Dubai, has so far avoided an immediate shortage due to strong inventories built earlier this year.
“As of now, there is ample stock, but if this drags on for a few months, then there will be a problem,” Chirag Sheth, principal consultant for South Asia at Metals Focus, told Bloomberg.
Weaker near-term demand in India has also helped cushion the impact, as higher imports earlier in the year have left domestic inventories relatively high.
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Refiners Face Cost Pressures
Refiners across the region are also facing supply challenges, particularly in sourcing doré, the semi-refined gold bars produced at mining sites before further refining.
India's largest precious metals refinery MMTC-PAMP typically sources around 10% of its doré from a Middle Eastern mine, but these supplies have now been disrupted.
Logistics costs for sourcing gold from alternative regions have surged 60-70% since the war began, said Samit Guha, Chief Executive Officer and Managing Director at MMTC-PAMP.
The spike in transport expenses is further squeezing margins for refiners and traders.
Other Trade Disruptions
The conflict is also affecting other commodities moving through the Gulf region.
Nearly 800 to 1,000 containers carrying agricultural produce from Maharashtra are currently stranded at Dubai's Jebel Ali port, according to exporters.
The shipments include bananas, grapes, pomegranates, watermelons, onions and leafy vegetables, many of which were destined for Gulf markets during the Ramadan demand surge.
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The grape trade has been particularly impacted. Exporters estimate that 5,000-6,000 tonnes of grapes already at ports could be affected, while another 10,000 tonnes of export-grade grapes may now have to be diverted to the domestic market at lower prices.
Congestion has also built up at Jawaharlal Nehru Port (JNPT) near Mumbai. Around 80 containers of grapes meant for Dubai remain unloaded, while more than 200 containers from Nashik are stuck outside the port, according to the Horticulture Produce Exporters Association.
Exporter groups and farmer organisations have urged the government to step in with subsidies, port charge waivers and procurement support if the disruption persists, warning that continued delays could lead to significant financial losses.
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