Unprecedented demand for gold is driven by fears of a potential trade war between the USA and China, as well as concerns over new tariffs on gold imports. Switzerland’s gold exports to the US surged, with shipments hitting 64 tons in December. COMEX gold inventories reached their highest levels since summer 2022, reflecting increased investor interest. Premiums on gold futures traded at COMEX have risen significantly, leading to delays in gold issuance in London. Experts predict prices could approach $3,000 soon.
Unprecedented Demand for Gold: What’s Driving the Movement?
The allure of gold as a ‘safe haven’ investment has never been more pronounced. Recent events have prompted a significant influx of gold from Switzerland to the United States, raising questions about the underlying factors at play. The current gold price has surged, reaching extraordinary heights—up to $2,882 per ounce this week. Market analysts frequently attribute this surge to apprehensions surrounding a potential ‘trade war’ between the USA and China, as gold is often viewed as a refuge during turbulent times.
However, this explanation only scratches the surface. A more pressing concern in the gold market is the possibility of new tariffs on commodity imports, including gold bars, imposed by the US government. Although the administration hasn’t explicitly mentioned gold in its tariff discussions, the mere threat has led to a significant increase in gold shipments to New York.
Switzerland’s Gold Exports to the USA: A Clear Trend
The shift in gold movement is evident from customs data, revealing that Switzerland dispatched a remarkable 64 tons of gold to the USA in December alone. According to Carsten Fritsch, a commodity expert at Commerzbank, these deliveries are largely driven by fears that import duties could be applied to gold entering the United States.
In addition, gold reserves at the New York futures exchange, COMEX, have seen a notable rise. In December, the inventory swelled by 123 tons, with another 290 tons added at the start of January—the most substantial monthly inflow since May 2020, during the peak of the pandemic. Presently, COMEX gold inventories exceed 1,000 tons, marking the highest level since summer 2022. This surge coincides with a 75 percent increase since the beginning of Donald Trump’s presidency.
The significant premium on gold futures traded at COMEX compared to London further illustrates the appeal for investors. Recent transactions have seen premiums reach as high as $60 per ounce for June contracts, prompting a strategic shift from the London Bullion Market to COMEX.
This disparity has resulted in considerable delays in gold issuance in London, with investors now facing wait times of four to eight weeks to collect their gold from the Bank of England—a stark contrast to the usual one-week timeframe. As Fritsch points out, the scarcity of available gold in London could be a contributing factor to the ongoing rise in prices, even amid stable interest rate expectations.
Looking ahead, experts are optimistic about the potential for gold prices to climb even higher, with some suggesting that the $3,000 mark could soon be within reach. According to market analysts, after hitting this milestone, the gold market may experience a brief respite before continuing its upward trajectory.