Tens of billions of dollars of bullion has flowed into the United States due to anxieties over President Donald Trump’s impending tariffs.
On Wednesday, the inventories for New York’s Comex bourse reached 39.7 million ounces of gold, which is the most since 1992, and worth approximately USD$115 billion.
The collection has more than doubled since early December as a surge in US prices over international benchmarks created a lucrative arbitrage opportunity for traders transporting gold there.
Normally, premiums between New York futures and the dominant London spot market remain modest. This generally reflects the costs of shipping, storage, and financing. However, late last year, fears that President Donald Trump’s sweeping tariff measures could include gold led some traders to close out short positions on Comex, pushing futures well above London spot prices.
Traders rushed to profit from the unusually large price gap, bringing gold into the US.
Donald Trump’s tariff threats have created significant uncertainty in global markets, influencing investor sentiment toward gold.
His administration has either pursued or threatened aggressive trade policies, including tariffs on China, Europe, and other major economies. This has caused the growth of fears of economic disruption and inflation. Gold, traditionally seen as a safe-haven asset, became more attractive to investors hedging against potential currency devaluation and market instability.
Comex-registered warehouses now hold a stockpile that surpasses the previous record set in February 2021. This is when inventories peaked due to a buildup triggered by the market fallout of the pandemic.
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Warehouses hold an amount of gold equivalent to 80% open interest
The current dislocation appears to be fading as tightness in the physical market eases and premiums decline. Daily gold inflows into depositories have dropped from peaks of more than 1 million ounces in late January to roughly 200,000 ounces or less in the past week.
Under normal conditions, traders who sell futures on Comex typically close their positions by settling in cash. However, they can also deliver gold into Comex-registered depositories to exit their positions.
Warehouses now hold an amount of gold equivalent to about 80 per cent of the aggregate open interest. Before 2020, this figure was typically around 20 per cent, as banks preferred to store gold in London and hedge their positions by selling futures in New York.
The recent shifts in gold flows between London and New York have influenced gold prices. In late 2024, fears of U.S. import tariffs led to significant gold shipments from London to New York, increasing COMEX gold stocks by 126 per cent.
This movement tightened London’s gold supply, prompting increased borrowing from central banks. The surge in demand for physical gold in New York, driven by higher COMEX futures premiums, contributed to rising gold prices, reaching record highs.
However, recent reports indicate that the outflow from London’s vaults to the U.S. has slowed as price fluctuations diminish, suggesting a potential stabilization in gold prices.
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Gold is necessary for multiple computing related technologies
The shifting dynamics in the gold market, particularly the recent surge in US stockpiles and the easing of supply tightness, will have broad implications across various industries, from jewellery and electronics to gold production.
A stabilization or potential decline in gold prices could benefit jewellers where demand has been dampened by high costs. Lower prices may encourage increased purchases, potentially driving a rebound in global jewellery sales. However, central banks continue accumulating gold as a hedge against economic uncertainty, which could limit how far prices drop.
Gold is essential for microprocessors, circuit boards, and connectors due to its superior conductivity and resistance to corrosion. A decline in gold prices could slightly reduce production costs for semiconductor and consumer electronics manufacturers.
For gold producers, the impact will depend on how prices shift in the coming months.
Companies like Calibre Mining Corp. (TSE: CXB) (OTCMKTS: CXBMF) , which operates in Newfoundland, Nicaragua and Nevada, have been expanding production and maintaining strong cash flow.
If gold prices remain volatile or elevated, mid-tier producers like Calibre could continue to benefit from sustained investor interest. However, a prolonged decline in prices could lead to cost-cutting measures or adjustments in exploration and development plans.
Larger producers like Kinross Gold Corporation (TSE: K) (NYSE: KGC) have more flexibility to weather price fluctuations due to their diversified global operations. A sustained drop in gold prices could pressure margins and force a reassessment of expansion strategies. The long-term trajectory of gold prices will ultimately depend on broader economic conditions and central bank policies.
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