Dubai gold trades at discount to London amid conflict
Flight disruptions from the Middle East conflict have led Dubai gold to trade at a discount to London. Demand remains weak in India as buyers await stability.
Gold prices in the United Arab Emirates have shifted to a discount relative to the United Kingdom as flight constraints caused by regional conflict keep more bullion in the local market. The disruption of physical gold flows through Dubai—a major global trading hub supplying Switzerland, Hong Kong, and India—has persisted for ten days following widespread passenger flight cancellations linked to the conflict involving the United States, Israel, and Iran.
The local market remains at a discount with wide variations ranging from $10 to $30 per troy ounce in thin trade. While spot gold prices in London have declined by 6% since the initial safe-haven spike on February 28, other commodities such as Brent Crude Oil have seen prices soar. Market participants, including those following major miners like Barrick Gold Corporation, are closely watching the volatility as gold was recently quoted at $5,109 per troy ounce.
Nicky Shiels, head of metals strategy at MKS PAMP, noted that the market is facing significant volatility due to unresolved questions regarding the duration and escalation of the conflict.
\"Loco Dubai Gold trading at a discount to London is telling just as the 2011 Arab Spring saw steep discounts in the region.\"
Analysts at Heraeus suggested that the market's relatively measured response might imply an expectation that the conflict will be short-lived. They noted a historical parallel to the 2022 invasion of Ukraine by Russia, where gold prices rallied for two weeks before erasing those gains and returning to a sideways trend. Currently, demand remains subdued in both the Middle East and India as price volatility prompts buyers to delay their purchases.
