what war does ! ............. a Price Drop !!!!!!!!!!!!!!!!

 

காதல் கத்தரிக்காயும் ! ஈரான் சண்டையும் - என்  செய்யும் என் தங்கமே !!

 

Few years ago, Brinjal (egg plant) prices soared in local market in Chennai – when asked the vendor said - there is WAR  between Iran and Iraq.

 

Almost every household purchase brinjals every week.  In Chennai, the wholesale market is in Koyambedu (earlier it was kothawalchavadi!!) – supply of vegetables come from Tindivanam, Cuddalore, Maduranthakam, Trichy, Krishnagiri.   Yes, brinjal and vegetable prices do go up  due to the Gulf/Middle East war (Iran-Israel-US conflict),  they would say - higher fertilizer, fuel, and logistics costs disrupting supplies.  Wars often trigger price spirals – to distant places too. 

Post-WWII hyperinflations hit Germany (1921-23) and Hungary (1945-46) after massive war financing via currency issuance. Post-1973 Yom Kippur War oil shocks sparked 1970s stagflation globally.  The war started on 6 October 1973, when the Arab coalition launched a surprise attack across their respective frontiers during the Jewish holy day of Yom Kippur, which coincided with the 10th day of Ramadan. Wars cause GDP drops (13%), consumption/investment falls (11-14%), and inflation surges (50-62%) lasting years, financed by printing money that erodes purchasing power. 

Can you imagine some  price drop ! in the backdrop of war !! that too of something that has been going up, up, up and up in  India !! 

 

Gold rates in the Gulf are falling due to a stronger US dollar, rising US Treasury yields, and reduced expectations for Federal Reserve rate cuts amid persistent Middle East tensions and inflation fears. Spot gold dropped about 5% recently to around $5,029-$5,118 per ounce after peaking above $5,300, pulling Gulf prices down (e.g., Dubai discounts amid air traffic issues disrupting flows). Dubai physical gold trades are  at discounts due to suspended Middle East air routes halting bullion to India/Asia, amplifying local rate drops despite global safe-haven bids. 

News reports suggest that Dubai's gold market is offering significant discounts, as Middle East conflict disrupts flights and shipping. Buyers are hesitant due to high costs and delivery uncertainties, leading traders to offer up to $30 an ounce below the global benchmark. While some shipments are moving, delays are impacting physical bullion availability in India, though current inventories are ample.  Many shipments remained stranded on Friday, the people said, although some bullion had been loaded onto flights leaving Dubai from the middle of this week. 

The United Arab Emirates, and Dubai in particular, is an important center for refining and exporting bullion to buyers across Asia, as well as a conduit for shipments from Switzerland, the UK and several African countries. Its airspace has been partially closed due to a barrage of Iranian missiles as the US-Israeli war with Tehran extends for a seventh day with no sign of resolution. Gold is typically transported in the cargo holds of passenger aircraft.  With  flights from the UAE severely restricted, traders and logistics firms are reluctant to transport high-value cargoes overland to airports in countries such as Saudi Arabia and Oman, due to the risks and complications involved, particularly when transiting land borders.  

While the Dubai Good Delivery standard — the standard of gold bars widely used locally and regionally — is typically traded at a discount to the London prices, the shipping bottleneck is making the gold even cheaper.  But buyers in India – one of the largest consumers of gold shipped from Dubai – can afford to wait, with near-term demand relatively muted and inventories swollen by a large volume of imports in January, said  a  consultant for South Asia at Metals Focus.  “As of now, there is ample stock,” he said, “but if this drags on for a few months, then there will be a problem.” 

There are also some signs that refiners are encountering challenges in sourcing doré – semi-refined gold bars typically cast at the mine site. India’s largest precious metals refinery, MMTC-PAMP, gets around 10% of its doré from a mine in the Middle East, but supplies have been disrupted, said a spokesperson. For new contracts supplied from elsewhere, logistics costs have soared by 60% to 70% since the war began, he said.

 

The not so good news for Indian buyer is - Indian gold rates are likely to remain volatile short-term but trend higher overall in 2026, driven by global safe-haven demand, inflation hedging, and seasonal factors like weddings, despite recent Gulf-linked drops. 

தங்கம் வாங்கலையோ தங்கம் !!  இதை படிச்சுட்டு வீட்டுக்காரம்மா உடனடியாக தங்க கடைக்கு போகணும்னு சொன்னா !!  Enjoy life with Thangamani !!

 

Regards – S Sampathkumar
7.3.2026