The United States' insatiable demand for gold has created a significant shift in global gold markets, impacting reserves and trade flows worldwide. In January, U.S. gold reserves fell by 1.7% compared to December, as over 600 tons, or nearly 20 million ounces, of the precious metal streamed into New York City vaults. This movement is driven by fears of impending tariffs on gold imports, prompting U.S. banks, investors, and traders to transfer their holdings to domestic storage facilities.
Switzerland emerged as a key player in this shift, with its gold exports to the U.S. reaching the highest level in over 13 years. Simultaneously, London's gold reserves dwindled for the third consecutive month, illustrating the profound impact of the U.S.'s increasing imports from countries like Canada, Switzerland, Colombia, Mexico, and South Africa. The premium for gold futures on the Commodities Exchange Centre (Comex) also widened significantly during this period.
"Supply chains have been disrupted because of this huge sucking sound, which has been the United States importing gold ahead of the potential tariffs," stated John Reade of the World Gold Council.
The anxiety over potential tariffs has led to a notable shift in trading strategies. Traders are opting to close out short positions or hold physical gold in New York to capitalize on the premium difference between Comex gold futures and London spot prices. As of Thursday, Comex futures traded at $2,930.6 per ounce, compared to London's spot price of $2,901 per ounce.
"Suddenly everybody has been trying to get hold of one kilogram bars that are eligible to be placed in Comex warehouses and ship them to New York, and that means that other gold flows have been interrupted," added Reade.
This reshuffling of gold inventories has severely impacted London, traditionally known as the terminal market for gold. As inventories move from private London vaults to Comex vaults in New York, the availability of metal in London's private vaults continues to decline.
"As the market has been shifting inventories of gold from private London vaults to Comex vaults, the availability of metal in private vaults in London has been declining," commented Nikos Kavalis, managing director of Metals Focus.
The U.S.'s domestic gold production is also on a downward trend, with estimates indicating a drop from 170 tons in 2023 to 160 tons in 2024. This decline, coupled with the potential threat of tariffs on imports from Canada and Mexico—two major suppliers—has further fueled the rush to stockpile gold domestically.
"The biggest concern is that there could be a blanket tariff on all imports into the U.S. and that this could also apply to gold," warned Kavalis.
Singapore has also seen an increase in its gold shipments to the U.S., surpassing typical export levels. This highlights how widespread the ripple effects of U.S. import policies have become across global markets.
"But if you're now suddenly worried that you might have to pay an import tariff, then you don't want your gold in London, you need to have it in New York before the tariff comes in," explained Reade.
The looming possibility of tariffs has created an urgent need for refineries to produce one-kilogram bars suitable for Comex warehouses, although production capacity remains limited.
"There is only a limited capacity for refineries to produce one kilogram bars," noted Reade.