London Gold Bullion Falls to $3010 as 'Narrower Trump Tariffs' Slash Comex Arb
Monday, 3/24/2025 15:29
LONDON GOLD fell on Monday to its lowest 3pm benchmark price since breaking $3000 per Troy ounce for the first time ever last week as US stock markets rose and the price of New York Comex gold futures cut their premium over London bullion towards the lowest of 2025 so far on news that President Trump's trade tariffs will be less aggressive than feared, writes Atsuko Whitehouse at BullionVault.
Declaring on Friday that
"April 2nd is Liberation Day in America!!!" because of far-reaching import duties to be imposed on foreign goods, Trump later told reporters in the Oval Office that "flexibility is an important word".
Bloomberg and the Wall Street Journal both then reported over the weekend that next Tuesday's new tariffs will be "diluted...more focused...narrower" than previously thought.
US equities opened the week 1.6% higher, driven by "Trump's softened tariffs stance" according to Reuters, even as preliminary PMI survey data from S&P Global Research for March said that
US manufacturing activity is suddenly shrinking thanks to "fewer instances of output having been buoyed by the front-running of tariffs.
"New orders growth came close to stalling in the goods-producing sector. Input buying in the sector also fell back into decline."
Sucking gold bullion into US warehouses amid Trump's threat of trade tariffs, the price of New York's most active Comex futures contract – traded on the CME derivatives exchange – jumped in January as much as $60 per Troy ounce above London bullion quotes amid speculation that import duty would be applied to precious metals.
But that Comex-London arb today sank as low as $2 per ounce, close to its lowest since New Year 2025, as word of Trump's more "flexible" approach coincided with new data showing that
the glut of gold now held in US warehouses – sucked into CME-approved storage by banks and other merchants wanting to exploit that price gap – has risen to yet another all-time high.
"Don't conflate 'tariff uncertainty' with uncertainty over the economic impact of tariffs," warns Nicky Shiels, head of metals strategy at Swiss bullion refining and finance group MKS Pamp.
"The trade war that President Trump's tariff hikes are causing is, by all accounts, inflationary," reckons Bruce Ikemizu, chief director of the Japan Bullion Market Association (JBMA), in his latest note.
Members of the US Federal Reserve's policy team last week held Dollar interest rates unchanged and also kept their average forecast for where rates will end 2025 despite raising their 'dot plot' expectations for this December's inflation rate from 2.5% per year to 2.8% on the core PCE measure.
The Fed's preferred measure, core PCE fell to 2.6% year-on-year in January from 2.9% in December. The first estimate for February, out this coming Friday, is forecast to have risen back to 2.7%.
"The Fed would be MUCH better off CUTTING RATES as U.S.Tariffs start to transition (ease!) their way into the economy," tweeted Trump on his privately-owned Truth Social platform after last week's US central bank decision.
"Do the right thing. April 2nd is Liberation Day in America!!!"
With the most-active Comex gold futures dropping to $3014 per Troy ounce around 3pm London time, London bullion dropped to $3010 as the S&P500 index of US corporate stocks jumped to a 2-week high.
The price of silver bullion was less volatile, holding in line with Friday's 9-session lows beneath $33 per Troy ounce as the Comex-London arb for the more industrially-useful precious metal held around 50 cents.
The cost of borrowing gold in London meantime traded beneath 0.4% per annum for the 2nd session running, with 1-month lease rates sharply down from early February's multi-year peak near 5.5% per annum.
Gold inflows to Comex-approved warehouses saw gold stockpiles rise another 0.7% last Friday, according to data from the CME, reaching 1,303 tonnes.
That all-time high is 6.2% greater than the previous high of February 2021, back when the Covid Crisis also sucked bullion into New York storage to exploit Comex futures' price gap over London quotes.
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