Futures in New York, which are backed by bars shipped from Switzerland and other key trading and refining hubs, surged to a record.
Traders, analysts and executives across the industry had understood the bars would be exempt from reciprocal tariffs enacted by US president Donald Trump, such as a 39pc levy on Swiss goods. But when a gold refiner in Switzerland asked about it, US Customs and Border Protection (CBP) clarified that one-kilogram and 100-ounce gold bars are subject to the levies, according to a letter from the agency.
The decision, 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, and traders said that shipments were freezing up in response to the shock news.
“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,” said Joni Teves, a strategist at UBS. “Until there is clarity, we expect the gold market and precious metals markets more generally to remain very nervous.”
The US Customs notice was first reported by the Financial Times.
The decision extends a tumultuous year for gold, which has soared to unprecedented levels amid strong buying from central banks and as Mr 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 included gold and silver in its list of exemptions from the tariffs announced in early April.
The industry is still seeking answers to several questions: It’s unclear if the US will also impose tariffs on larger 400-ounce bars that underpin trading in London. There’s also uncertainty about levies for other major gold-producing countries. Speculation is even swirling that the US government issued the ruling in error, and that it could be legally challenged.
The Comex exchange in New York is one of three key global pricing venues, alongside London and Shanghai, where prices are now trading at a big discount.
The chaos has been exacerbated by the absence of a formal announcement or explanation. The CBP’s ruling, which says that one-kilogram and 100-ounce gold bars should be classified under a different category than the one that received the exemption, was not initially made public but has now appeared on the CBP’s website.
The decision will have particularly significant implications for refiners in Switzerland, which as the largest gold refining hub plays a particularly crucial role in the smooth functioning of the global market. If prices in London and New York move out of lockstep, Swiss refiners can melt down the larger bars that are traded in the UK capital so they can be delivered against US futures contracts, and vice versa.
“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.”
source