The military operations launched by the US and Israel against Iran, and Iran's retaliatory strikes across the region, have caused major disruptions to gold and silver supplies. The UAE is one of the world's largest precious metals processing and transit hubs.

Concerns about gold availability have grown following the suspension of flights through Middle Eastern countries, says John Reed, senior market strategist at the World Gold Council. As a result, gold in India — which had previously traded at a $50 per ounce discount to London prices — was already trading at parity by Monday. Gulf countries have closed their airports due to military risks since the start of the week. Dubai alone was handling around 2,000 passenger flights daily.

Dubai is the world's leading precious metals transit hub, handling around 20% of international gold flows last year, according to the Financial Times. The UAE both receives African-mined metals for processing and serves as a major transit point for shipments from Europe to Asia. In 2024, Dubai was the world's second largest gold exporter (around $60 billion), with India as its largest recipient.

Switzerland leads with exports of over $110 billion, home to the main refining facilities.

Gold is typically transported on passenger flights in loads of up to 5 tonnes. Although several planes departed Dubai on Tuesday, priority was given to perishable cargo and no gold was on board, people familiar with the situation told the FT. One bullion trader summed up the situation: "Right now, nothing is moving by air anywhere."

India, the world's largest jewelry producer, will likely be hardest hit by the disruption to Dubai transit, says Rhona O'Connell, analytical director at StoneX.

Silver recipients are also facing difficulties. Chinese retail investor demand for silver had been particularly strong in recent months, driving prices from around $50 per ounce in October-November to a record $121.6 on January 29, before a sharp correction. Chinese silver inventories are now at a 10-year low.

Silver bars cleared through London and prepared for air shipment can no longer be delivered via Dubai as usual and must be rerouted. A similar situation applies to gold bars, though to a lesser extent, market participants told the FT.

Spot silver in London is trading Wednesday at $85.4 per ounce, while gold — which peaked at $5,595.5 per ounce in late January — stands at $5,170.