Gold futures jump to record high on US tariff surprise

[Redator]

Gold futures soared to an all-time high on Friday following reports of an unexpected US tariff on bullion bars that could bear significant implications on the global flow of the precious metal.

On the COMEX, the most active December gold contract rose as much as 2.3% to $3,534.1 per ounce — a record high. By 10:45 a.m., it had pulled back to $3,484.8 an ounce.

Meanwhile, the spot price was largely muted, trading mostly between a narrow range of $3,380-$3,400 and is heading for a slight decrease for the week.

The Friday price moves give the New York gold futures a premium of more than $100 an ounce over the London Benchmark, as investors bet on the tariff shock to snarl imports into the US.

Market in shock

The Financial Times had reported earlier that 1-kilogram and 100-ounce gold bars are now subject to US import duties, citing a ruling letter from the US Customs and Border Protection.

US gold futures are mostly backed by bars shipped from Switzerland, a key trading and refining hub. Under the latest reciprocal tariffs enacted by President Donald Trump, Swiss goods shipped into the US — which now include gold bars — will be subject to a 39% levy, the highest given to a developed nation.

The US customs ruling, while yet to be formally announced, has thrown the global bullion market into turmoil.

The Swiss Precious Metals Association said in a statement on Friday that the reclassification threatens to negatively impact the international flow of physical gold.

“We are particularly concerned about the implications of the tariffs for the gold industry and the physical exchange of gold with the US, a long-standing and historical partner for Switzerland,” its president Christoph Wild said.

Gold industry hit by US tariff uncertainty after customs service ruling

Traders on Friday said that shipments had largely frozen up in response to the shock news.

The decision extends a tumultuous year for gold, which has soared to unprecedented levels amid strong buying from central banks and as Trump’s trade war drives haven demand.

Earlier this year, physical flows were upended as traders rushed billions of dollars’ worth of gold and silver into the US as New York prices traded at large premiums in anticipation of potential tariffs. However, that trade came to a crashing halt after the US exempted the metals from the April wave of tariffs.

Clarify needed

The tariff ruling, if it remains in place, has sweeping implications for the flow of bullion around the world, and potentially for the smooth functioning of the US futures contract.

Gold’s role as a financial asset and global currency sets it apart from other commodities like copper that have been roiled by tariffs.

“In the long run, the existence of US tariffs on deliverable gold products raises the question on the role of futures trading in the US,” Joni Teves, a strategist at UBS AG, told Bloomberg. “Until there is clarity, we expect the gold market and precious metals markets more generally to remain very nervous.”

The decision will have particularly significant implications for refiners in Switzerland, which plays a particularly crucial role in the smooth functioning of the global market. The 1-kilo bars are the most common form traded on COMEX, the world’s largest gold futures market, and comprise the bulk of Switzerland’s gold exports to the US.

“Gold is moved back and forth between central banks and reserves around the world,” said Robert Gottlieb, a former precious metals trader and managing director at JPMorgan Chase, referring to the bars. “We never, ever thought that it would be hit by a tariff.”

It’s unclear whether other types of gold bars, such as 400-ounce bullion that’s the most-traded in London, will be subject to tariffs. If not, those could simply be shipped to the US and recast into one-kilogram blocks, one refinery manager told Bloomberg.

However, such a scenario would still render the CME contract unviable, according to Nikos Kavalis, managing director at consultancy Metals Focus, since the US only has limited gold refining capacity.

(With files from Bloomberg)