In recent days, gold’s price in Dubai have fallen significantly partly due to difficulties for traders to get bullion out of the region. The flight disruptions caused by the continuing conflict in the Middle East is causing a tumoil in the gold market. There are multiple shipments that are stuck at the major trading centre because of airspace closures in the UAE, preventing regular cargo being moved. Therefore, traders have begun to offer discounts between $30 an ounce below the daily benchmark from London to reduce their increasing costs due to storage and financing.
Transport disruptions have begun to impact bullion supplies in many key markets, India included. There have been several delays in cargo shipments, as per reports resulting in short-term limits on the availability of physical bullion in the country.
Even though there are still transportation problems, demand for gold and silver in India is not very strong at the moment. The Principal Casino Advisor for South Asia, Chirag Sheth, said that stocks of gold and silver continue to be sufficient given the quantity of imports earlier this year. He points out that people are able to be patient when waiting for their purchases of gold and silver to arrive but if it remains that way for a long time period we could see some issues with the availability of these metals.
Normally carriers of gold would be transported in the belly of commercial airliners; however, with many flights being grounded, it is difficult to transport high dollar value shipments. Cargo carriers in Dubai have started shipping out gold as of recently; however, many remain stuffed at regional airports waiting to get their deliveries.
In addition, traders and logistics entities have expressed little willingness to transport gold via truck to airports located within nearby countries (e.g., Saudi Arabia, Oman). Industry participants believe there are too many risks and complications in transporting high value products across land borders and this type of transportation is not a feasible option in the current climate.
Dubai is one of the most important centres in the world for the refinement and export of gold. Dubai also serves as an important transit point for the export of bullion from Switzerland, the UK, and several African nations to Asia. However, the war between the United States, Israel, and Iran has disrupted normal air traffic due to the partial closure of airspace in the UAE following the missile strikes by Iran.
For more updates, join/follow our WhatsApp, Telegram and YouTube channels.