Finshots Daily
Original podcast
In today’s episode on 9th March 2026, we tell you how Dubai became one of the largest gold hubs in the world. Book a Free call with Ditto
1,709 words · 1 speaker
Hello folks, you're tuned in different shots daily. In today's episode, we tell you how Dubai became one of the largest gold hubs in the world.
Before we begin, here's a quick word from team Ditto. Life can be unpredictable and if the main earner is not around, the bills won't stop. That's why term insurance is so important. It gives your family a fixed payout so they can cover school fees, EMIs and daily expenses without stress. If you buy it early, you can get a one crore cover for as little as thousand rupees a month and the premium stays the same for your entire policy term. That's real peace of mind at a very small cost. And if you're not sure which plan is right for you, book a free call with Ditto. No spam, just honest guidance. And we're trusted by over 8 lakh people for their health and term insurance needs. Now, back to the story.
When geopolitical tensions rise, there's one favorite topic we always like to talk about. Safe haven assets. When markets turn shaky, investors usually rush out of equities and look for safer places to park their money. That often means government bonds, a strengthening US dollar or the all-time favorite, gold. Today we'll talk about gold because something unusual has been happening in the world of gold over the past week. According to the London benchmark, gold prices have actually slipped from about 5,300 dollars per quid ounce, that's around 31 grams, to roughly 5,000 dollars. And that's odd because times of geopolitical stress usually push investors toward gold, not away from it. One reason for that is the fact that gold had already rallied sharply in the last few months. And after such a strong run-up, buying it suddenly didn't look as attractive.
At the same time, rising interest rates on US bonds and a strong dollar began putting investors in that direction instead. Because unlike gold, bonds actually pay interest. So when yields rise, they become a more appealing option. There's another thing too. When equity markets fall sharply, many investors face margin calls on their trading accounts. To cover those losses, they often need quick cash. And one of the easiest assets to sell in a hurry is gold. So when investors start liquidating their gold holdings, it creates a widespread selling pressure, pushing prices down further. But there's also a less obvious factor behind gold's recent behavior. Dubai.
World's most important gold trading hubs. In fact, about twenty percent of the world's gold passed through Dubai last year, making it the second largest hub after Switzerland. The problem is that the recent tensions in the Middle East triggered by the US-Iran-Israel war have disrupted cargo movements in that region. Dubai imports gold from African countries like Mali, Ghana, Guinea, Sudan and South Africa. And after refining it, much of that gold is shipped to major demand centers like India, often via cargo on passenger flights. But with airspace is closed, that flow has slowed. Besides, keeping large quantities of gold sitting in walls isn't cheap. Storage and insurance costs start piling up, so to move inventory faster, traders in Dubai have apparently begun selling off gold at discounts of up to thirty dollars per troy ounce compared to the London benchmark.
For context, that's roughly a hundred rupees cheaper per gram. So between higher bond yields, forced selling by investors, and discounted gold being sold in Dubai, the metal's price has been behaving a little differently than usual. But that also makes you ask, how did Dubai become such a powerful hub in the global gold trade despite not producing any gold itself? Well, let's take it from the top. Long before skyscrapers pierced Dubai's skyline, the city was nothing more than a sunscotch sediment built around the Saltwater Creek. We're talking about the early nineteen hundreds, by the way. Back then, Dubai made a living from pearl diving, fishing and small coastal trade. The population was modest too, so gold was barely in the picture. But its geography had a different fate carved out for Dubai. If you look at the map of Dubai, you will see that it sits neatly along the Persian Gulf,
with India to the east, East Africa to the west, and Europe accessible through the Gulf and Persia to the north. Naturally, trade routes began to converge here. So, Indian and Iranian merchants started using Dubai Creek as a stopover on the route between Gulf ports, the Indian subcontinent and Persia. And wherever traders gather, markets tend to follow. That's how a small gold trade slowly emerged around those merchants, with a handful of jewelers setting up shop along the Old Spice trading routes. That's the very place we now know as the Gold Souk in Dubai's Dera. The ruling Al-Maktum family spotted this opportunity and decided to capitalize on it by abolishing taxes on imports and exports. That effectively turned Dubai into a free port, which meant that foreign merchants began
pouring in. The population doubled, gold began to flow in volumes Dubai had never ever seen. And among those goods increasingly was gold. But that was only the beginning and the rise of the gold trade hadn't really begun until two things happened. The first had a lot to do with us Indians and our love for gold. For many families in India, gold has always carried deep cultural value. Gold always showed up in weddings, festivals as a symbol of family wealth and even our mothers dowries, which I don't think of pride, please don't give, take or encourage them. But around the nineteen forties and especially after independence, India imposed strict controls on gold. The government restricted gold imports and even tried to limit how much gold individuals could hold. The idea was to reduce demand by making gold harder to access.
Except it didn't quite work that way. Instead of killing demand, it simply pushed the trade underground. Gold smuggling surged and because of those restrictions, a massive price gap opened up between Dubai and India. In some cases, the same gold could sell for almost double the price in India. Dubai's merchants spotted the opportunity instantly and began moving gold to India via boats, with buyers collecting their cargo in international waters near the Indian coast. By the nineteen sixties, Dubai had become a major center of gold trading. Much of the gold flowed in from London, which at that time was one of the world's key billion markets. To give you a sense of scale, in nineteen sixty-eight alone, Dubai imported fifty-six million euros worth of gold. But its true transformation into the city of gold began when oil was discovered in Dubai around the same time.
Oil wealth allowed the city to build serious infrastructure. The creek was widened so large vessels could dock, ports, dry docks and an international airport soon followed. And because taxes remained low and trade was still largely unrestricted, Dubai became even more attractive for merchants. Then came another unexpected boost. A civil war broke out in Lebanon, which until then had been one of the Middle East's leading financial and trading centers. As conflict spread, many of Lebanon's gold traders, bankers and commodity merchants fled the country looking for a safe space. Dubai welcomed them with open arms and almost overnight, the city gained an entire ecosystem of trading expertise. As more traders arrived, gold volumes kept growing. The once modest gold souk in Dera expanded
into a glittering marketplace filled with twenty-two carat necklaces, bangles and jewelry, eventually housing over three hundred retailers. And that's when the nickname truly stuck. Dubai had become the city of gold. Modern policies helped strengthen its position even further. In two thousand and two, for instance, the UAE government set up the Dubai Multi Commodities Centre, or DMCC, a free zone designed specifically for commodity trading, including gold. Over time, it grew into the world's largest commodities free zone, eventually hosting more than eighteen hundred companies involved in gold trading, refining and manufacturing. A few years later came the Dubai Gold and Commodities Exchange, that is DGCX, which gave institutional investors a regulated platform to trade gold futures. But the real cornerstone of Dubai's gold trade still remained its tax policies.
While buyers in many European countries pay fifteen to twenty percent in taxes on gold purchases, Dubai traditionally imposed none. A five percent VAT was introduced only in twenty eighteen, and even that is, by the way, refundable for tourists at airport. Dubai has also tried to build credibility around its gold ecosystem. Its refineries now meet the strict standards of the London Billion Market Association, that is LBMA, and the DMCC's Dubai Good Delivery Standard aims to ensure that gold passing through the Emirates is responsibly sourced and ethically certified. That said, the gold trade in Dubai hasn't been without controversy. The UAE, including Dubai, has often been accused of being a major destination for gold smuggled out of Africa. For context, a report by Spis Aid estimated that around four hundred thirty-five tonnes of gold
worth about thirty-one billion dollars left Africa, undeclared by the way, in twenty twenty-two alone, much of which may have reached the UAE. Now, that's roughly forty percent of the continent's production, or about twelve percent of global mine supply. But, yes, no trade comes without its downsides. What's undeniable though is how a city with no gold mines of its own managed to become the world's second-largest gold hub, with nearly fifteen hundred tonnes of gold passing through it every year. And Dubai isn't done yet. To make this moniker even more evident, there's chatter that it may soon build a eight-hundred-metre-long street lined with gold in the city's new gold district, Indira, right where the gold souk is located, with over one thousand retailers today.
How that plays out for Dubai will likely depend on how the Middle East crisis unfolds. All right, folks, I'll see you in the next one.
Thank you for listening to today's episode. And if you want to share your feedback or suggestions, do drop us an email to [email protected]. Until next time.
Page updated November 10, 2026 · transcript and summary are machine-generated
