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Strong US demand for gold is to “suck” bullion from some countries as traders try to stockpile it before the Canadian and Mexican presidents' tariffs become high gear.
New York vault has a “majority of gold,” Adrian Ashe, research director at Brion Vault, told CNBC.
Data provided by the World Gold Council shows that more than 600 tonnes, or about 20 million ounces of gold, have been transported to city safes since last December. That amount of gold usually does not belong to New York, said John Reid, Asian and European market strategist at the World Gold Council.
“Store there only when extraordinary circumstances are occurring,” Reade told CNBC.
The threat of tariffs on gold has spurred US banks, investors and traders to shift valuable metals to New York exchange centres and other safes if they are normally kept in London.
“There are concerns that the imminent tariffs in Canada and Mexico will affect both gold and silver,” said Nicky Shiels, head of metals strategy at MKS PAMP.
The supply chain is being destroyed by this huge suction sound.
John Reed
World Gold Council
Trump recently declared that clearing US tariffs on imports from Mexico and Canada will move forward in the future after the delay in implementation expires next week. On February 1, the US President signed an executive order that imposes a 25% tariff on Canadian and Mexican products.
However, some investors said they fear that tariff threats will surpass both countries.
There are concerns that broader tariffs will also be incurred in the UK and Switzerland.
“The biggest concern is that all imports into the US have comprehensive tariffs, which could also apply to gold,” said Nikos Kavalis, managing director of Metals Focus.
Canada and Mexico are one of the largest exporters of gold to the US. The US imports the most gold from CanadaData from OEC World shows that Switzerland, Colombia, Mexico and South Africa continue.
Since winning Trump's election last November, US gold futures have far surpassed its international counterparts, creating arbitrage opportunities for those who can move large quantities of bullion to the United States.
Tariff concerns
They believe the move is primarily expected by traders looking to close short positions, or those holding physical gold in New York, who are expecting short futures contracts to win a massive premium.
As of Thursday, gold futures listed on COMEX were trading at $2,930.6 per ounce, while London's spot gold priced at $2,901. The premium was wide in January.
According to BullionVault data, US warehouses currently stock four years of US consumer and gold demand.
US domestic production in 2024 The down was estimated to be 160 tons From 170 tons in 2023according to data from the US Geological Survey.
Traders believe Trump will “can 100% tariffs” on US gold imports tomorrow without falling into US gold prices.
Normally there is no urgent need for physical gold delivery, but investors need to ensure they can make them.
“There are usually few people who have to make delivery, but they need to be able to make delivery at all times,” said the World Gold Council lead.
“But if you're worried that you might have to pay import duties all of a sudden, then you don't want your money in London, so you have to have it in New York before the duties get in,” he said.
Supply Chain Disruption
“The supply chain is confused by this huge suction sound, the US, which imports gold before potential tariffs,” Reed said.
The complex factor is the COMEX depository Delivery mainly through kilogram barshe added, it is usually only available in some regions, such as China, Southeast Asia, the Middle East and India.
“The refineries have only limited capacity to produce a kilogram bar,” Reade said.
“All of a sudden, everyone is trying to get a 1 kilogram bar that is eligible to be placed in a Comex warehouse and shipped to New York. That means the other flow of money has been interrupted,” he added.
London is often called Gold terminal marketit had a big impact from the shift.
“The availability of metals in private London vaults is declining as the market has changed gold inventory from private London vaults to Comex Vaults,” said Kavalis, managing director of Metals Focus.
Also, large gold bars have been pulled from London to other refineries around the world. Standard bullion stored in London is a 400 oz bar Not a kilobar.
Gold reserves in London's safes This was the fall for the third consecutive month in January, data from the London Bullion Market Association. Gold reserves in January were 1.7% lower than in December.
Gold exports from Switzerland to the US It rose to its highest level in January in at least 13 years, according to a Reuters report citing Swiss customs data. And Singapore has shipped more gold to the US than usual, Cavallis noted.
For hedges against these tariffs, the gold will be shipped to the US and “money will be sucked out of the rest of the system,” Reed said.
