Dubai gold trade hit as Iran-Israel-US conflict delays shipments; bullion sold at $30 discount, says report

Gold shipments remain stranded in Dubai following disruptions caused by ongoing conflict between the US, Israel and Iran, resulting in a partial closure of United Arab Emirates' airspace. While some bullion has been loaded onto departing flights since midweek, many consignments are still delayed, Bloomberg News reported. Dubai’s role as a key hub for refining and exporting bullion across Asia means these disruptions are reverberating throughout the global gold market. The extension of the Iran-related conflict into its seventh day is maintaining uncertainty and logistical challenges for exporters and buyers alike.

Gold on discount

As a result of these delays, traders in Dubai are offering gold at discounts compared to the global benchmark as they seek to move stuck inventory. Sources familiar with the matter, who declined to be named, told Bloomberg News that discounts are reaching as much as $30 an ounce below the London benchmark price. The decision to sell at reduced rates is driven by mounting storage and financing costs, especially as buyers hesitate to commit to new shipments without assurance of prompt delivery.

The United Arab Emirates, and Dubai in particular, plays a crucial role in the international bullion market, serving both as a refining centre and an export point for gold destined for buyers in Asia. Dubai acts as a transit hub for shipments originating in Switzerland, the UK, and several African countries. The ongoing closure of airspace due to missile activity from Iran is directly impeding these flows, affecting both the scale and timing of deliveries.

Impact on India

India, one of the largest importers of gold from Dubai, is experiencing limited immediate impact due to currently ample inventories. Chirag Sheth, principal consultant for South Asia at Metals Focus, said, “As of now, there is ample stock, but if this drags on for a few months, then there will be a problem.” The muted near-term demand in India is attributed to heightened imports earlier in the year, which have left inventories swollen for the time being.

Spot gold prices have risen nearly 20% so far this year, holding above $5,000 an ounce. However, recent trading has been volatile, with some downward pressure this week as the dollar has strengthened. The price dynamics underscore the sensitive nature of the bullion market to both geopolitical and currency fluctuations, as well as physical supply chain disruptions resulting from the ongoing conflict.

Refiners and challenges

Refiners in the region are encountering additional challenges, particularly in sourcing doré, the semi-refined gold bars that are usually cast at mining sites before further processing. India’s largest precious metals refinery, MMTC-PAMP, typically sources around 10% of its doré from a Middle Eastern mine, but these supplies are now disrupted. This has forced refiners to seek alternative sources, often at significantly higher logistical costs.

Samit Guha, Chief Executive Officer and Managing Director at MMTC-PAMP, stated that logistics costs for new contracts outside the Middle East have surged by 60% to 70% since the onset of the war, exacerbating operational challenges for the precious metals industry. The increase in logistics expenses is adding further pressure on already tight margins for refiners and traders alike.

What's happening with other products

Nearly 800 to 1,000 containers carrying agricultural produce from Maharashtra have been stranded at Dubai’s Jebel Ali port following disruptions linked to the ongoing US–Iran conflict, causing significant losses for exporters and farmers.

Jebel Ali, one of the Middle East’s largest ports and a key distribution hub for Gulf markets, has seen operations severely disrupted since the conflict escalated on February 28. As a result, containers that had already reached Dubai—as well as shipments that left India before the escalation—remain stuck and unloaded.

The stranded consignments include bananas, grapes, pomegranates, watermelons, onions and leafy vegetables, most of which were exported from Maharashtra. Exporters say the timing of the disruption has compounded losses because Gulf demand for fruits such as grapes, pomegranates, bananas and watermelons typically peaks during Ramadan, when shipments from India increase sharply.

The grape trade has been particularly affected. Exporters estimate that 5,000–6,000 tonnes of grapes currently lying at ports may be hit by the disruption, while another 10,000 tonnes of export-quality grapes still in orchards may now have to be diverted to the domestic market, potentially 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 over 200 containers dispatched from Nashik are stuck outside the port, according to the Horticulture Produce Exporters Association.

Exporters say the disruption has stalled the entire supply chain, with packed produce piling up in warehouses and packhouses while shipping schedules remain uncertain. Each container represents produce worth several lakhs of rupees, adding to mounting financial losses.

Farmer organisations have sought government intervention, demanding subsidies, waiver of port charges and demurrage, and temporary procurement support to help exporters and growers manage the losses if the disruption continues.