• A surge in gold deliveries to the U.S., driven by fears of potential tariffs under Trump, has caused a shortage in London, the world’s largest gold trading hub.
• Gold prices hit a record high of $2,800.99 per ounce, fueled by safe-haven demand amid fears of economic disruptions from tariffs.
• Logistical challenges in moving gold globally, particularly from Europe to the U.S., are straining markets in Singapore, Hong Kong, and beyond.
• The Bank of England faces unprecedented demand, with wait times for gold withdrawals extending up to four weeks or more.

A surge in gold deliveries to the United States, driven by fears that President Donald Trump could impose tariffs on the precious metal, has created a shortage in London, the world’s largest over-the-counter gold trading hub. With gold stockpiles in New York reaching their highest levels since 2022, London bullion market players are now scrambling to borrow gold from central banks to meet demand. The ripple effects are being felt globally, as the price of gold hits record highs and logistical challenges strain the market.

The Bank of England, which stores gold for central banks and financial institutions, is facing unprecedented demand, with wait times to withdraw bullion stretching from a few days to four weeks or more. “People can’t get their hands on gold because so much has been shipped to New York, and the rest is stuck in the queue,” said one industry executive.

Why the rush to New York?

The rush to move gold to the U.S. began after Trump’s repeated threats to impose tariffs on imports, including raw materials. Although the president has not specifically mentioned gold, market participants are hedging their bets. “There is a feeling that Trump could go across the board and impose new tariffs on raw materials coming into the U.S., including gold,” said Michael Haigh, head of commodities research at Société Générale.

This fear has led to a 70% increase in gold stocks at COMEX-approved warehouses in New York over the past two months, with 12.2 million troy ounces delivered. The influx has tightened the supply of readily available gold in London, known as the “Loco London free float,” leaving traders and institutions scrambling to secure bullion.

Gold prices hit record highs

The uncertainty has sent gold prices soaring. Spot gold reached an all-time high of $2,800.99 per ounce on Friday, marking a 6% increase this month alone. Analysts attribute the surge to safe-haven demand, as investors brace for potential economic disruptions caused by tariffs.

“Repeated tariff threats have fuelled safe-haven flows into gold,” said IG market strategist Yeap Jun Rong. “Any downside surprise in the inflation reading could suggest greater policy flexibility for the Federal Reserve, potentially bringing forward rate-cut expectations and providing further support for gold.”

Global ripple effects

The shortage in London is not just a local issue. Other major gold hubs, including Singapore and Hong Kong, are also feeling the strain. “The logistical complexities of moving large quantities of gold, particularly from Europe to the U.S., are amplifying these stresses,” said Alexander Zumpfe, a precious metals trader at Heraeus Metals.

Despite the challenges, Bank of England Governor Andrew Bailey downplayed the significance of the delays. “London remains the major gold market in the world. If you are involved in that market and want to trade or use your gold, you really need to have it in London,” he told the British parliament’s Treasury Committee.

As the gold market navigates this unprecedented situation, the stakes are high. With prices at record levels and supply chains under pressure, the industry is bracing for further volatility. While Trump’s tariff plans remain uncertain, the rush to secure gold highlights the fragility of global markets in the face of political uncertainty. For now, London’s gold traders are left waiting in line, hoping the storm will pass without further disruption.

Sources for this article include:

Reuters.com

FT.com

Reuters.com