Gold in Dubai is being sold below international benchmark prices as the expanding conflict in the Middle East disrupts transportation routes and strands bullion in one of the world’s most important trading hubs.
Traders in Dubai are reportedly offering discounts of up to $30 per ounce compared with prices in the London market, according to people familiar with the situation. The unusual price gap reflects mounting logistical challenges as the regional conflict forces flight cancellations and sharply raises the cost of shipping and insuring precious metals.
Dubai normally functions as a key distribution center for gold flowing between refineries, banks, and major consumer markets across Asia, Europe, and Africa. However, with many flights grounded and insurance premiums surging, moving bullion out of the city has become increasingly difficult.
As a result, some traders are choosing to sell their holdings at discounted prices rather than continue paying storage and financing costs while waiting for transport routes to reopen.
Buyers Pull Back Amid Uncertainty
Many traditional buyers have stepped away from the market, reluctant to place new orders while transportation remains unreliable. Even when gold can be shipped, delivery times are uncertain and the costs significantly higher than normal.
“Logistics are the main issue,” one trader familiar with the situation said. “Even if the price is attractive, buyers worry about whether the metal will actually arrive on schedule.”
The situation has created an unusual disconnect between prices in Dubai and global benchmark prices set primarily through trading in London Bullion Market Association markets in London.
War Adds Volatility to Precious Metals Markets
The disruption comes as the escalating regional war injects fresh volatility into global commodities markets. Historically, geopolitical tensions tend to boost demand for safe-haven assets such as gold. Prices have generally held strong during the conflict, though logistical disruptions are now creating regional distortions.
While investors in global financial markets continue to buy gold as a hedge against uncertainty, physical traders are dealing with the practical challenge of moving metal across increasingly complicated transport routes.
Dubai’s role as a bullion hub makes the disruption particularly significant. The city acts as a bridge between major gold suppliers and consumers, including markets in India, China, and across the Middle East.
Shipping Bottlenecks May Be Temporary
Market participants expect the price gap between Dubai and global benchmarks to narrow once flights resume and shipping routes stabilize. For now, however, the combination of high transport costs and delivery uncertainty is discouraging buyers and forcing traders to offer price concessions.
If the conflict persists and transportation constraints continue, analysts say regional physical gold markets could remain fragmented, with localized discounts or premiums emerging depending on supply conditions.
For bullion traders in Dubai, the priority is simple: move the metal when possible — even if it means accepting lower prices in the short term.
