The news that the U. S. government has imposed tariffs on imported gold bullion sent shockwaves through international financial markets. Following Washington’s announcement of a 39 per cent tariff on Swiss imports, a report in the Financial Times on the 8th revealed that, the U.S. Customs and Border Protection Agency’s July 31 letter of order specifies that 1-kilogram and 100-ounce bars should be classified under a tariff code that requires higher taxes. According to the New York Times, this means a 39% tariff on the weight of gold bars from Switzerland. Wall Street was caught off guard by the news, which was widely expected to be tax-free. Gold futures surged to an all-time high of $3,534 an ounce in New York yesterday after the announcement, but the White House immediately denied plans for tariffs, calling the reports“Misinformation”, and promised to issue an executive order to clarify, since then gold price gains quickly narrowed.
The Financial Times reported that prices of precious metals, including gold and silver bars, had risen 27 per cent since the end of the 2024 year. Inflation fears, the risk of tariffs and the weakening of the dollar are all important reasons for Gold’s rise. In the first half of this year, after President Donald Trump announced the imposition of “Reciprocal tariffs” on a number of trading partners, the US gold futures market set off a buying spree, at one point it caused a shortage in other gold futures centres around the world, such as London.
(CNN) — adding gold to the list of CNN tariffs on Swiss products would hit the core workings of the U.S. Gold market, according to a report Tuesday. Comex gold futures rely on physical delivery, while about 70 per cent of the world’s refining capacity comes from Switzerland. “The tariffs will significantly increase the cost of physical delivery of gold and undermine the reliability basis of futures contracts as traders rely on free-flowing gold to hedge their risk,” said Jonny Tevez, strategist at UBS
The more far-reaching impact is the challenge to New York’s position as the Global Centre for gold pricing. Ole Hansen, head of commodities at Denmark’s Shengbao Bank, warned that the gold tariffs could distort markets and make the New York stock exchange less attractive to global markets. Rob Haworth, Senior Strategist at Bank of America, further noted that global investors may reconsider their position in the New York market because of tariff costs.
While the White House tried to calm the storm, the official ruling letter from the US Customs and Border Protection Agency and conflicting statements from the executive branch continued to fuel market concerns. Andrea Horwath said the market was waiting for more certainty. There are also analysts who say the risk of disruption to the global gold supply chain is now starting to emerge. The unusual differential between gold prices in London and New York reflected a sharp increase in risk premiums in the US market.
The Financial Times reported that the global gold trade relies on the“London-switzerland-new York” triangular system of circulation: large gold bars are transported between London and New York via Switzerland, where they were recast to different specifications. The most heavily traded gold bars were 400 ounces in London, while New York preferred a kilogram about the size of a smartphone. CNN analysts said the White House tariffs on Switzerland would force a restructuring of the international gold supply chain, a turmoil that could spread from financial contracts to retail terminals.
US retailers have been forced to impose restrictions on bullion purchases as economic uncertainty intensifies consumers’ appetite for the precious metal, raising the possibility of future costs being passed on to consumers, Yahoo Finance reported Monday.