US President Trump stated on Monday (August 11) that he would not impose tariffs on gold, a remark that relieved the global gold and silver markets and put an end to speculation over the past few days about the potential involvement of gold in the ongoing global trade disputes.
“Gold will not be subject to tariffs!” Trump wrote on his media platform “Truth Social.” He did not disclose any further details.
After Trump’s announcement, the prices of gold futures on the Commodity Exchange (COMEX) in New York and the global spot prices in London remained almost unchanged. The spot gold narrowed some of its losses but still fell by over 1.2% that day.
Last week, a decision by the US to impose tariffs on gold sent global markets on a rollercoaster ride. The global gold market relies on a network composed of banks, refineries, and courier companies that can airfreight gold bars between major trading centers at fluctuating prices.
On July 31, the US Customs and Border Protection (CBP) sent a letter to a Swiss refinery stating that gold could not be exempted from tariffs. This news was reported by the media on August 7 (last Thursday), resulting in a surge in New York gold futures prices to a historic high within the week. Industry experts also warned that tariffs would have serious consequences for the market.
On August 8 (last Friday), after the Trump administration hinted that imported gold bars would eventually be exempt from tariffs, the price of gold plummeted rapidly.
Gold is often seen more as a financial instrument than a physical product, and imposing tariffs on it would have far-reaching effects. The global gold market is supported by a system of gold bar manufacturing and circulation, including futures exchanges in New York and Shanghai, as well as a massive over-the-counter trading market regulated by London banks. Major consumption centers like Mumbai, Dubai, and Hong Kong also rely on it.
In New York and London alone, there are over $11 trillion worth of gold bars stored in vaults to support gold trading, with most of it stored by large traders such as JPMorgan Chase and HSBC Holdings.
Normally, if the price of gold in New York rises significantly, large gold bars traded in London would be melted in Switzerland and then recast into smaller 1 kg (2.2 lb) bars deliverable on the COMEX for shipment. However, due to Switzerland facing a 39% tariff from the US, the COMEX gold price would need to rise to around $4,700 per ounce to make shipping feasible.
The imposition of gold tariffs by the US would have a particularly large impact on Switzerland, a major hub for gold refining and transportation. Trump’s statement on Monday alleviated these concerns.
“It’s great to hear that the crisis has been avoided,” said independent gold market analyst Ross Norman to Reuters. “This will greatly alleviate the pressure on the gold and silver markets, as the potential market turmoil was immeasurable.”
After Barrick Mining announced its quarterly earnings, its stock price fell by 2.8% on Monday afternoon, while the stock price of the world’s largest gold miner, Newmont, slightly fell to $68.87. Both companies are major gold producers in the US.
With strong purchases by central banks worldwide and the escalation of trade tensions driven by Trump’s trade war, the price of gold has risen to unprecedented levels.
Earlier this year, in anticipation of possible tariffs being imposed, the price of gold in New York surged significantly, leading traders to ship billions of dollars’ worth of gold and silver into the US, causing a reversal in physical flows.