The conflict in the Middle East has caused the grounding of Dubai flights, 20% of the world's gold logistics may be interrupted, and silver has also been affected!

# Zhao Ying

Source: Wall Street CN

## Middle East Conflict Hammers Global Precious Metals Supply Chain: Dubai Flight Suspensions Severely Disrupt Gold Cross-Border Transport; Indian Gold Rebounds Quickly from $50 Discount to Par with London

Silver may face even greater disruption than gold, with a growing backlog of “blocked exports” in London. Analysts warn that if the situation drags on, supply shortages and price premiums in Asia will become unavoidable.

Escalating conflict in the Middle East is hitting a critical node in the global precious metals supply chain.

Dubai serves as a key hub for global gold flows, handling roughly 20% of the world’s gold volume last year. Following the U.S. and Israeli military strikes against Iran last Saturday, commercial flights across the Gulf region have been largely suspended, resulting in severe disruptions to cross-border shipments of gold and silver.

In a report on Wednesday, the Financial Times quoted precious metals traders warning that if the situation persists, regional prices in Asian markets could face further pressure, and volatility in gold and silver prices would rise sharply.

The market has already shown an initial reaction. John Reade, senior market strategist at the World Gold Council, said that the suspension of Middle Eastern flights has raised concerns over gold availability. In India, the domestic gold price rebounded quickly from a discount of about $50 per troy ounce relative to London last Friday to parity on Monday.

Gold prices overall fell about 3% this week to around $5,100 per ounce, but remain nearly 20% higher than at the start of the year.

### Dubai: A Critical Transit Hub for Global Gold

Dubai plays a pivotal role in the global precious metals logistics system. According to customs data, it was the world’s second-largest gold exporter in 2024. Its gold flows cover two main sources:

- Gold bars mined in Africa and refined in the UAE

- Precious metals transiting from Europe to Asia via Dubai

India is the largest destination for Dubai’s gold exports.

Rhona O'Connell, head of market analysis at StoneX, noted that India would be the biggest victim of the Dubai logistics disruption, as Dubai is the main re-export port for precious metals flowing into the country.

“In the short term, market participants might find alternative routes, but if the situation persists for a long time, everything becomes unpredictable,” she said.

Gold is typically transported as cargo on passenger flights, with a single shipment carrying up to 5 tons — equivalent to about $830 million at current prices.

### Flight Suspensions Create Backlog of “Blocked Exports”

Since the military operations began last Saturday, nearly all commercial flights in the Gulf region have been grounded. While a small number of passenger flights departed Dubai on Tuesday, sources said they carried no gold cargo — perishable goods were given priority.

“Nothing is moving in the air right now,” one gold bar trader said, expressing hope the disruption would not last long.

A knock-on effect has also appeared in London. Some logistics carriers said they are dealing with gold shipments that have reached Heathrow Airport but cannot be transported further due to flight cancellations.

These goods have already cleared customs, creating so-called “blocked exports” — shippers must formally withdraw the declarations before rerouting, adding extra costs and delays.

### Silver May Face Worse Disruption Than Gold

Industry insiders revealed that silver shipments from London are under even greater pressure than gold.

Silver prices have already seen extreme volatility this year, partly driven by heavy retail buying that pushed Chinese silver inventories to a 10-year low. The latest logistics disruption has compounded an already tight supply picture.

This logistics disruption from the Middle East conflict is not the first major stress test for the precious metals supply chain this year. Last year, the threat of potential U.S. tariffs led to a large influx of precious metals into stockpiles inside the U.S., also significantly distorting the global gold distribution pattern.

Analysts and traders broadly agree that the ultimate impact depends on how long the crisis lasts.

- If flight disruptions are resolved quickly, the market can absorb the shock.

- If the conflict drags on, supply shortages and price premiums in Asia will become unavoidable, and volatility in gold and silver will intensify further.

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Markets are subject to risks; investment requires caution. This article does not constitute personal investment advice and does not take into account individual investors’ specific investment objectives, financial situations, or needs. Investors should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Any investment based on this article is at your own risk.