Gold prices in Dubai are abnormally low, with discounts of up to $30 per ounce below the London standard. This is because the US-Israel-Iran crisis is getting worse, making flights harder to get and stopping the city from being a worldwide bullion hub.
How the war choked Dubai’s bullion hub
Dubai is usually a vital node for physical gold, connecting African mines and European refiners to large consumer markets in Asia, including India and China. Gold is usually transported in the cargo holds of passenger jets, and when airlines canceled or suspended routes following US and Israeli strikes on Iran and Tehran’s retaliatory missile salvos, that air “corridor” essentially closed.
At the height of the escalation, “virtually all” airlines suspended flights through the emirate, industry sources say, stranding bullion shipments in vaults and warehouses. With no clear date for when all Gulf airspace will be fully reopened, traders have been forced into makeshift solutions or just sit on inventory.
Why gold is selling at a discount in Dubai
Since metal no longer seems to be moving outside the country and exports are largely blocked, Dubai traders find themselves facing a classic inventory squeeze: As they sit on piles of metal, storage, financing and insurance costs keep accruing but they cannot readily move that metal to their usual customers. To counter that, they have begun offering discounts as large as 30 dollars an ounce against the London spot price, a significant spread considering elevated global gold prices today.
Many foreign buyers have backed away from new orders because premiums for shipping and war‑risk insurance have skyrocketed, and timelines for delivery are uncertain. Instead of continuing to pay endless storage and financing costs while waiting for air routes to normalise, traders would rather take lower prices now and keep cash flowing.
A paradox: local discounts, global highs
The Dubai discount sits uncomfortably against the global backdrop of gold rising to near or above 5,000 dollars an ounce this year as investors have fled to safe‑haven assets amid geopolitical uncertainties and tariff fears. In futures markets prices have been buoyed, or even risen, reflecting tightness in deliverable metal at major hubs such as London and New York despite physical bullion being effectively stuck in the Gulf.
It has produced pronounced regional price dislocations that have not been as sharp since 2020, when a pandemic flight ban severed the umbilical cord between London and New York opening rare arbitrage windows for those with metal in the “right” geographical locations. Now, the holders of gold outside the Gulf have a temporary pricing advantage; those who are concentrated in Dubai are having to discount their prices to sell stock.
Who gains and who loses
For consumers and jewellers trading locally in the UAE, the discount is a rare window to buy physical gold below global reference levels, at least while stocks are plentiful and retail outlets well supplied. But the stranded metal ties up capital and complicates risk management for large wholesalers and financiers, who depend on quick turnover of inventories and hedging to balance between physical markets and paper.
Asian importers, particularly in India, face a dwindling inflow from Dubai and will have to source more directly (from other hubs such as Switzerland) or through longer shipping routes, usually at a higher cost and involving longer lead times. In the longer term, those increased logistics and insurance costs could trickle through into higher local premiums for consumers in major gold‑buying nations, despite Dubai itself trading at a discount.
What happens next
How long the discount lasts on Dubai’s gold will depend in large part on the length and severity of conflict, and how quickly airlines resume normal schedules across Gulf airspace. Should flights be running again in days or weeks, the episode might become remembered as a fleeting arbitrage opportunity; if disruptions drag on, traders have warned that problems tying down physical delivery risk worsening, forcing more contracts into cash settlement and straining regional pricing even further.
The shock has also revealed structural vulnerabilities in the global bullion supply chain, which relies heavily on a small number of transit hubs and air routes. And even if the current war subsides, banks, refiners and big dealers might now get a second-look at their logistics, take steps to diversify routes and inventory locations, and urge shifts toward more resilient models so that a single regional conflict doesn’t again leave one corner of the world’s biggest bullion corridor stuck in place.