US gold futures hit record high after Trump tariff blindsides global market
Unexpected levy from Trump administration could redraw trade in the metal, analysts and investors warn
Leslie Hook
The US has said one-kilo and 100-ounce gold bars should be classified under a customs code that is subject to duties © ReutersUS gold futures hit a record high on Friday after Donald Trump’s administration blindsided the global bullion market with a plan to impose tariffs on imports of one-kilo and 100-ounce bars.
In a move that analysts and investors warned could redraw global trade in gold, the US Customs and Border Protection agency ruled that the bars should be subject to duties, dashing expectations they would be exempt.
The step by the CBP, first reported by the Financial Times, is a particular blow to Switzerland, which is the world’s biggest exporter of the metal.
Relations between Washington and Bern had already deteriorated last week after the US announced a 39 per cent duty on imports from the country.
US gold futures rose to a new intraday record of $3,534 per troy ounce on Friday, while London prices remained flat.
The news had come as a “huge surprise”, said Joni Teves, analyst at UBS, adding: “This is precisely what the market feared.”
In a sign of the disruption unleashed on the market, US gold futures on New York’s Comex exchange diverged sharply from spot prices, commanding a premium of more than $100 per ounce on Friday.
The tariff also threatened New York’s role as the largest gold futures market, analysts warned, because it raised the price of the metal in the US compared with other regions.
“This creates an issue for the global gold market, which uses Comex gold futures to hedge positions,” said Teves.
“It raises the question of whether there may be alternate ways of settling these gold futures contracts, in terms of products or locations, or if other centres become more relevant.”
When Trump launched his sweeping tariffs on “liberation day” in early April, they included an exemption for one category of bullion, which covered the majority of US gold imports.
A factsheet issued by the White House on April 2 also stated that “bullion” was exempt from the so-called reciprocal tariffs.
However, the CBP decision, contained in a ruling letter dated July 31 seen by the FT, has upended long-standing market convention by designating that one-kilo and 100-ounce gold bars should be classified under a different customs code — one not included in the exemption list.
Traders amassed a record stockpile of the metal at the Comex earlier this year as they prepared for the small chance gold would be ensnared by the tariffs.
“The price moves today would have been so much more violent if banks and other financial institutions had not moved so much gold into the US over the past eight months,” says John Reade, senior market strategist at the World Gold Council.
“In the end, caution proved to be the right choice.”
Some market participants privately believe that the CBP may have made a mistake, and hope the customs department will amend the ruling.
Gold has staged a blistering rally this year, rising almost 30 per cent, as fears over inflation and government debt levels have increased its appeal as a haven asset.
Arun Sai, a multi-asset strategist at Pictet Asset Management, said the ruling from the CBP “just adds to the volatility of gold, not to its allure as a safe haven”.
Additional reporting by Ian Smith and Ray Douglas in London
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