The US demand in the US is ‘sucking’ rods from other countries

The US strong demand for AR is “absorbing” rods from some countries as traders try to reserve it before US President Donald Trump’s tariffs in Canada and Mexico kicking in high clothing.

There is a “Gold Glut” in New York safe, CNBC told Adrian Ash’s research director, Adrian Ash, Bulionvault’s research director.

More than 600 tons, or almost 20 million gold ounces, have been transported to city safe since December last year, according to data provided by the World Council of gold. This amount of gold does not normally belong to New York, said John Reade, the Golden World Council strategist for Asia and Europe.

“You only keep it there when extraordinary circumstances are happening,” Reade CNBC told.

The threat of tariffs for gold has prompted US banks, investors and traders to relocate precious metal to the exchange center of goods and other vaults in New York, when otherwise it would be maintained in London.

“There are concerns that immediate tariffs in Canada and Mexico will affect both gold and silver,” said Nicky Shiels, head of the Metal Strategy at MKS Pamp.

Trump recently stated that tariffs included in the US for imports from Mexico and Canada will go ahead after a postponement for their implementation expires next week. On February 1, the US president signed executive orders by imposing 25% fees for products from Canada and Mexico.

But some said investors are afraid that the threat of tariffs would go beyond the two countries.

There are sleepy concerns that the broader tariffs will enter the UK and Switzerland, which are also large physical centers of gold, Shiels added.

“The biggest concern is that there may be a blanket fee for all imports into the US and that this can also apply to gold,” said Nikos Kavalis, managing director of Focus metal.

Canada and Mexico are among the largest gold exporters in the United States. SH.BA imports gold from Canada, followed by Switzerland, Colombia, Mexico and South Africa, according to OEC World data.

Since winning Trump’s elections last November, the golden future in the US has mainly exceeded their international counterparts, creating arbitration opportunities for those who are able to relocate large quantities of rods to the US, according to CNBC industry observers.

They attributed the movement mainly to traders seeking to close short positions, or those who hold physical gold in New York, waiting for brief future contracts to capture the great premium.

Since Thursday, the golden future listed in Comex was trading $ 2,930.6 per ounce, while the price of the gold point in London was $ 2,901 – a change of nearly $ 30. The premium was wider in January.

US warehouses now reserve consumer and gold demand for four years, according to data from Bulionvault.

The American Internal Gold Production in 2024 was estimated at 160 tons, from 170 tons in 2023, according to data from the US geological survey.

Traders are of the opinion that Trump “can topple 100%tariffs” for US gold imports tomorrow without making gold prices in the US because there would be enough gold in Hula, ASH said.

Although there is usually no pressing need for physical shipments of gold, investors need to make sure they can be done – something Trump’s fees threaten to spoil.

“Very few people have to make shipments normally, but you should always be able to make deliveries,” the World Council Read said.

“But if you are now unexpectedly worried that you may have to pay an import fee, then you don’t want your gold in London, you have to have it in New York before the fee comes in,” he said.

“Supply chains have been interrupted because of this great suction sound, which was the United States that import gold before possible tariffs,” Reade said.

A complicating factor is that Comex deposits mainly make shipments through kilo rods, which are usually available only in selected regions such as China, Southeast Asia, the Middle East and India, he added.

“There is only a limited capacity for refineries to produce a kilo of bars,” Reade said.

“Suddenly everyone has tried to catch a pound bars that are eligible to settle in Comex warehouses and send them to New York, and that means other gold flows have been interrupted,” he added.

London, often referred to as the Terminal Market for gold, suffered a major impact from change.

“While the market has been shifting gold inventories from private vaults to London to Vaults Comex, the availability of metals in private vaults in London has fallen,” said Focus Kavalis Metal Management Director.

Large gold bars are also being withdrawn from London to other refineries around the world, where they can be melted and refined in kilobaries because standard rod stored in London are 400-ons bars than kilobaries.

Gold reserves in Vaults and London fell for the third consecutive month in January, showed data from the Bullion Market Association in London. The amount of gold reserves in January was 1.7% lower than in December.

Switzerland’s gold exports to the US in January also increased to the highest level to at least 13 years, according to a Reuters report citing Swiss customs data. And Singapore has sent more gold than it would normally do in the United States, Kavalis noted.

Only to protect against these tariffs, gold is sent to the US, and that “absorbs gold from the rest of the system,” Reade said.