The United States has seen a significant influx of gold in recent months, with more than 600 tons, or almost 20 million ounces, transported into vaults in New York City since December last year. This movement of gold is largely attributed to the threat of tariffs on the precious metal, which has spurred U.S. banks, investors, and traders to shift bullion into the Commodities Exchange Centre and other vaults in New York. John Reade of the World Gold Council commented on the situation, stating, “Supply chains have been disrupted because of this huge sucking sound, which has been the United States importing gold ahead of the potential tariffs.”
The strong U.S. demand for gold is causing bullion to be moved out of some countries as traders stockpile it before U.S. President Donald Trump’s tariffs on Canada and Mexico take effect.
Adrian Ash, BullionVault’s director of research, spoke about the “glut of gold” in New York’s vaults, emphasizing that such a large amount of gold is unusual for the city. Nicky Shiels, head of metals strategy at MKS Pamp, expressed concerns that imminent tariffs on Canada and Mexico could affect both gold and silver.
Gold influx due to tariff threat
Investors fear that these tariffs could extend beyond Canada and Mexico, with the biggest concern being a potential blanket tariff on all imports into the U.S., which could also apply to gold. The movement of gold has created arbitrage opportunities for those able to shift large quantities of bullion into the U.S. Traders attribute this largely to those looking to close out short positions or those holding physical gold in New York expecting to short futures contracts to capture the outsized premium. The limited capacity for refineries to produce one-kilogram bars eligible for Comex warehouses has also interrupted other gold flows worldwide.
London, often referred to as the “center of the global gold market,” has experienced significant impacts from this shift, with large gold bars being redirected to other refineries for melting and refining into kilobars. Despite the current influx of gold into the U.S., the World Gold Council warns that ongoing geopolitical tensions could lead to further spikes and disruptions in the precious metal’s movement. As these trends unfold, keeping an eye on geopolitical developments will be crucial for market participants looking to navigate the complexities of precious metal investments.
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