US gold futures soared to a record high on Friday after a surprising decision from Donald Trump’s administration to impose tariffs on one-kilo and 100-ounce gold bars. This unexpected move by the US Customs and Border Protection (CBP) agency caught many analysts and investors off guard. They believed these bars would be exempt from tariffs, so the ruling came as a shock.
The tariffs especially impact Switzerland, the world’s largest gold exporter, just as tensions between the US and Switzerland were rising due to new tariffs on imports from the country. As a result, US gold futures jumped to an intraday high of $3,534 per troy ounce, while prices in London remained steady.
Joni Teves, an analyst at UBS, noted this was exactly what the market feared. The market’s reaction was swift, with US gold futures diverging sharply from other prices, creating a premium of over $100 per ounce on the New York Comex exchange.
The tariff could threaten New York’s status as the leading gold futures market. Analysts are concerned that this could limit the use of Comex gold futures for hedging, leading traders to look for alternatives. “It raises questions about possibly settling these contracts in different locations or with different products,” said Teves.
Earlier this year, when Trump announced sweeping tariffs, bullion was initially exempted. However, the recent CBP decision reclassified one-kilo and 100-ounce bars under a different customs code, removing the exemption. This shift has complicated longstanding market practices.
Traders had anticipated potential tariff impacts, and many built up extensive stockpiles of gold ahead of time. John Reade, a senior market strategist at the World Gold Council, remarked that the price swings would have been much more extreme if not for the proactive measures taken by banks and financial institutions to import gold into the US over the past several months.
Some in the market believe that the CBP might have made a mistake with its ruling and are hopeful for a revision. Meanwhile, gold’s popularity as a safe-haven asset continues to thrive, with prices increasing nearly 30% this year due to rising inflation fears and growing government debt levels. Arun Sai, a strategist at Pictet Asset Management, mentioned that while the CBP’s decision contributes to market volatility, it doesn’t diminish gold’s appeal as a safe haven.
In recent years, the demand for gold has increased during times of economic uncertainty, as people seek stability. This trend seems set to continue as global tensions rise and inflation remains a concern.
For more on this topic and reliable data about market trends, you can visit the Financial Times.
