Although the Trump Tariffs have impacted nearly every major sector of the market, gold has not been directly targeted. Despite this, gold prices appear to be reacting as if they were. Since the tariff announcement, inventories at COMEX and other registered vaults have surged significantly. According to recent data from the World Gold Council, registered COMEX inventories have increased by nearly 300 tonnes (around 9 million ounces), while eligible inventories have risen by more than 500 tonnes (approximately 17 million ounces), driving total stockpiles to levels last seen during the COVID-19 crisis.
TRUMP TARIFFS TRIGGERED A MOVEMENT FROM LONDON AND REGISTERED INVENTORIES
According to the report by World Gold Council, “This surge of gold imports into the US caught many gold market observers by surprise, as the country is (more or less) self-sufficient in its gold needs, being both a significant producer and a consumer.”
The movement was not driven by immediate supply shortages, but by risk management decisions. Financial institutions that typically hedge their COMEX futures exposure through over-the-counter positions in London chose to relocate gold to the US to avoid the possibility of paying higher charges should Trump tariffs materialize.
The impact on pricing was swift. The spread between the active COMEX gold futures contract and London spot prices widened significantly. At its peak, the differential reached $40 to $50 per ounce (roughly 140–180 basis points) — far above the two-year average of around $13 per ounce (about 60 basis points). By February, that spread had already moderated to around $20 per ounce (70 basis points), indicating that some normalization is underway.
As gold flowed westward, attention turned to London, the world’s largest over-the-counter trading hub. Reports of falling inventories and withdrawal queues at the Bank of England raised concerns about supply tightness. However, total London vault holdings remain substantial at approximately 8,500 tonnes, of which roughly 5,200 tonnes are held at the Bank of England. While withdrawal wait times increased, officials emphasized that logistical and staffing constraints — rather than structural shortages — were responsible.
Further evidence of temporary tightness appeared in the gold lending market. One-month gold lease rates spiked to nearly 5% in January, reflecting short-term stress in London. Yet by late February, those lease rates had cooled to around 1%, suggesting easing pressure.
Additional signs of normalization are emerging:
- The pace of COMEX inventory accumulation has slowed.
- Futures–spot spreads have narrowed from January highs.
- ETF bid–ask spreads remain orderly.
- Gold ETFs have seen strong inflows, with US$10.3 billion added year-to-date, increasing holdings by 113 tonnes, marking the strongest two-month period in two years.
TRUMP TARIFFS NEVER TARGETED THE GOLD
Importantly, gold itself has not been the target of Trump tariffs. The market reaction has been driven by precautionary repositioning and elevated policy uncertainty rather than an actual disruption in supply. Trade data shows that gold entering the US has largely come from Switzerland — where larger Good Delivery bars are refined into 1kg bars suitable for COMEX delivery — as well as from Canada, Latin America, Australia, and domestic US mine production.
The episode closely resembles the early stages of the COVID-19 crisis, when inventories surged and spreads widened before eventually normalizing. History suggests that the gold market — deep, global, and supported by diverse supply sources — has the capacity to absorb such shocks over time.
At its core, this period illustrates how policy uncertainty alone can distort global commodity markets. The threat of Trump tariffs was sufficient to shift hundreds of tonnes of gold across the Atlantic, widen spreads to multi-year highs, and temporarily tighten lending markets.
Yet despite the noise, the underlying spot gold market has remained orderly and continues to benefit from flight-to-quality flows amid elevated geopolitical and geoeconomic risks.
In this instance, markets reacted not to what happened, but to what might happen. And as spreads narrow, lease rates cool, and inventory growth slows, the evidence increasingly suggests that the disruption was precautionary rather than structural.
FAQs
1. Has the US imposed tariffs directly on gold?
No. Gold itself has not been directly targeted by US tariffs. The market reaction has been driven by uncertainty and precautionary positioning rather than actual policy measures.
2. Why did COMEX gold inventories rise so sharply?
Traders moved gold into the United States pre-emptively to avoid potential tariff-related costs. Registered inventories increased by nearly 300 tonnes, while eligible inventories rose by more than 500 tonnes.
3. Why did gold futures trade at a premium to spot prices?
The spread between COMEX futures and London spot prices widened to $40–$50 per ounce as traders priced in potential logistical and cost risks linked to tariff uncertainty. The historical average over the past two years was around $13 per ounce.
4. Is London running out of gold?
No. London vaults still hold approximately 8,500 tonnes of gold, including about 5,200 tonnes at the Bank of England. Withdrawal delays appear to be logistical rather than a sign of structural shortage.
5. Are signs of normalisation emerging in the gold market?
Yes. The pace of inventory buildup has slowed, futures–spot spreads have narrowed, and lease rates have cooled from nearly 5% to around 1%. These developments suggest the disruption is temporary rather than systemic.
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