Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
A surge in gold shipments to the US has led to a shortage of bullion in London, as traders amass an $82bn stockpile in New York over fears of Trump administration tariffs.
The wait to withdraw bullion stored in the Bank of England’s vaults has risen from a few days to between four and eight weeks, according to people familiar with the process, as the central bank struggles to keep up with demand.
“People can’t get their hands on gold because so much has been shipped to New York, and the rest is stuck in the queue,” said one industry executive. “Liquidity in the London market has been diminished.”
The BoE declined to comment.
Since November’s US election, gold traders and financial institutions have moved 393 metric tonnes into the vaults of the Comex commodity exchange in New York, driving its inventory levels up nearly 75 per cent to 926 tonnes, the highest level since August 2022.
Total gold flows into the US could be far higher than the Comex numbers reflect, according to market participants, because there are likely to have been additional shipments to private vaults in New York owned by HSBC and JPMorgan. The two banks declined to comment.
Traders say the shipments are intended to avoid tariffs on bullion that some fear could be introduced by US President Donald Trump.
“There is a feeling that Trump could go across the board and impose new tariffs on raw materials coming into the US, including gold,” said Michael Haigh, head of commodities research at Société Générale. “There is a bit of a scramble among participants in the gold market to protect themselves.”
The shipments are also the result of higher prices on the futures exchange in New York than in the cash market in London. The unusual arbitrage opportunity has incentivised traders to send the metal across the Atlantic.
Trump has yet to spell out his trade policy and has not specifically mentioned a duty on bullion, although he has threatened to impose wide-ranging tariffs on US imports.
Gold prices have risen 5 per cent since the start of the year, and are just $30 shy of their all-time record of $2,790 per troy ounce set in October.
London and New York are two main global markets for trading, with most physical trading taking place in the UK, while the futures market is in the US.
Many market participants compare the current US gold rush with the situation during the Covid pandemic, when lockdowns and uncertainty over shipments of gold trigged a surge in stockpiling on Comex.
The BoE stores gold for third parties such as financial institutions, as well as for other central banks and the UK Treasury.
Comex gold inventories have shot up 36 per cent this month, with 244 metric tonnes of inflows — the highest monthly inflows since May 2020, at the peak of the pandemic. Traders said they needed access to gold to fulfil certain futures contracts, which allow the buyer to take physical delivery of gold.
“The movement of gold needed to make its way into New York, that is basically what has been driving ‘stockpiling’,” said Joe Cavatoni, market strategist at the World Gold Council. “That is leading a lot of people to say, ‘we want to get ahead of it’, and that is driving the futures market into a premium.”
However, Cavatoni said he was cautiously optimistic that the coming tariffs would most likely not apply to bullion. “We are not getting a sense from the rhetoric from the administration that it intends to go after the monetary metals,” he said.
Last week, June contracts for physical gold on Comex traded at a premium of up to $60 per troy ounce over the London price. The difference has since fallen back to $10 per troy ounce as traders have moved gold to New York.
Read the full article here
