Middle East conflict cuts off gold logistics channels, Dubai spot prices sharply discounted

As the military conflict in the Middle East continues to escalate, a large amount of gold remains stranded in Dubai, a global gold trading hub, triggering a serious logistics crisis. To cope with the situation, traders have been forced to sell at prices $30 per ounce below the London benchmark price.
Sources familiar with the matter say that due to flight cancellations, airspace closures, and extremely high transportation and insurance costs, coupled with the inability to guarantee timely delivery, many buyers have had to suspend new purchase orders.
The United Arab Emirates (especially Dubai) is a core hub for global gold refining and trading, not only exporting gold to various parts of Asia but also serving as a key transit route for gold to Switzerland, the UK, and several African countries.
However, the ongoing escalation of the war has led to the closure of some UAE airspace. As the military strikes by the US and Israel against Iran enter the seventh day with no signs of stopping, this also means that the disruption of gold transportation channels may not be restored soon.
Although UAE flights are not the only option, traders and logistics companies are still reluctant to transfer goods via land to airports in countries like Saudi Arabia or Oman due to the risks and complex procedures involved in cross-border transportation.
It is worth noting that India, the largest buyer of Dubai gold, has confirmed delays or stranding of multiple shipments, leading to a short-term tightening of physical gold supplies.
However, thanks to recent moderate demand and the buffer provided by large import inventories in January, the market can currently cope. But if this situation persists for several months, potential problems may gradually emerge.
Currently, about 10% of semi-finished gold bars in India’s largest precious metals refinery originate from a mine in the Middle East. Since the outbreak of the war, transportation costs for new contracts signed by this refinery from other regions have surged by 60% to 70%.
Since the beginning of this year, spot gold has risen approximately 19%, with prices remaining above $5,000 per ounce. Although the strengthening dollar this week has put pressure on gold prices, the longer-term concern for the market may be the physical delivery difficulties caused by logistics disruptions rather than price fluctuations. #美伊局势影响