Kamal Ghorui
US-Irasel-Iran war impact on gold prices: In UAE’s Dubai, which finds itself in the midst of the escalating Middle East crisis, the yellow metal is now available at very steep discounts. Gold is currently being offered for sale at a substantial discount in Dubai as the conflict in the Middle East disrupts air travel and restricts suppliers’ ability to move bullion out of the major trading hub.The United Arab Emirates, particularly Dubai, serves as a major hub for refining and exporting gold to buyers across Asia. It also acts as a transit point for shipments arriving from Switzerland, the United Kingdom and several African countries.
Gold at steep price cuts in Dubai
As per a Bloomberg report, a number of buyers have postponed fresh purchases, unwilling to bear unusually high freight and insurance charges without certainty over delivery timelines. Consequently, traders have begun offering gold at discounts of up to $30 per ounce compared with the benchmark price in London, the report said. The move helps traders avoid having to continuously pay storage and financing costs.
Several shipments were still stranded as of Friday, the sources said, although a limited quantity of bullion had begun leaving Dubai on flights starting in the middle of the week.
However, part of the country’s airspace has been shut following a series of Iranian missile strikes as the conflict involving the United States, Israel and Tehran enters its seventh day without any clear resolution.Gold is usually transported in the cargo sections of passenger aircraft. With flights from the UAE heavily restricted, traders and logistics providers have been hesitant to move high-value bullion by road to airports in neighbouring countries such as Saudi Arabia or Oman, citing the logistical challenges and risks involved, especially when crossing land borders.Also Read | Israel-Iran war: What US 30-day waiver on Russian oil means for India – explained“Several shipments of gold cargo have either been delayed or left stranded, creating a temporary squeeze in the supply of physical bullion in India,” said Renisha Chainani, head of research at Augmont Enterprises Ltd., one of the country’s largest gold dealers.
However, buyers in India, which is among the biggest destinations for gold shipped from Dubai, are not under immediate pressure to replenish supplies. Demand in the near term remains subdued and inventories are relatively high following substantial imports recorded in January, Chirag Sheth, principal consultant for South Asia at Metals Focus told Bloomberg.“As of now, there is ample stock,” he said, “but if this drags on for a few months, then there will be a problem.”Spot gold prices have climbed nearly 20% so far this year and are holding above $5,000 an ounce. Even so, trading has been volatile, and the metal has faced pressure this week as the dollar strengthened.At the same time, there are indications that refiners are facing difficulties securing doré, the semi-refined gold bars that are usually cast at mining sites. India’s largest precious metals refinery, MMTC-PAMP, sources roughly 10% of its doré from a mine in the Middle East, but those supplies have been disrupted, said Chief Executive Officer and Managing Director Samit Guha. He added that for new supply agreements sourced from other locations, logistics expenses have surged by about 60% to 70% since the conflict began.
