The dramatic increase in gold futures during the past week was likely spurred by recent action concerning U.S. tariffs on imported gold bars. Switzerland is home to the world’s largest gold refining center. It’s an essential cog in the wheel, thanks to exporting tons of high-quality gold to the US.
On July 31, the U.S. Customs and Border Protection (CBP) sent out a rescission letter. They assigned 1-kilogram and 100-ounce gold bars to a specific customs code, which applies higher customs duties. This decision has raised alarm about what this initial move could have on gold prices. It has led to increased divergence between futures and spot prices.
At last check on November 23, December U.S. gold futures soared 0.7%, hitting $3,476.70. Gold jumped to an all-time high of $3,534.10 earlier this week. U.S. spot gold edged down 0.3% to $3,386.63 an ounce by 1151 GMT. This volatility has caused the futures-spot spread to widen to over $100 following announcement of the tariff imposition.
Gold prices have remained relatively stable, bouncing up and down within a $200 range since April. Analysts do not expect a large move in spot prices unless they cross the $3,450 mark.
Ricardo Evangelista, a senior analyst at ActivTrades, shared his thoughts regarding the possible long-term impacts that the tariffs would have.
“Given the volatility of U.S. trade-related decision-making, it is difficult to make longer-term predictions, but assuming a scenario in which tariffs remain in place … one would expect spot prices to be affected and to rise, narrowing the spread relative to the futures,” – Ricardo Evangelista.
To Ole Hansen, head of commodity strategy at Danish investment giant Saxo Bank, these moves may have the potential to solidify the London spot price. This price acts as one of the major checks on gold’s real price.
“All developments … for now solidify the London spot price as the most reliable source telling us what the real value of gold is,” – Ole Hansen.
Gold is on track for its second straight weekly gain, up 0.7% so far this week. Analysts are urging caution when making predictions about the future. They understand how volatile U.S. trade policies are and the disastrous effects these policies can have on global markets.