London Gold Rebounds as Comex Gap Shrinks, China Flips to Premium
Monday, 2/17/2025 13:52
GOLD rallied from Friday's steep drop on Monday, briefly recovering the $2900 level as the price gap between London bullion and New York Comex futures shrank despite US President Donald Trump's latest threat of import tariffs, and gold in China – its No.1 consumer market – signalled stronger demand even at 2025's fresh record prices,
writes Atsuko Whitehouse at BullionVault.
Gold bullion priced in the US Dollar has now surged 11.9% so far this year, outpacing all other major asset classes.
Spot prices in London's bullion market this morning regained half of Friday's 1.8% plunge, made after gold set a new all-time high of $2921 per Troy ounce at Thursday's 3pm London benchmarking auction.
With US stock and bond markets shut for Presidents' Day, gold premiums in New York – meaning the difference between the CME derivatives exchange's most-active Comex gold future and London physical bullion quotes – meantime fell to $12 per Troy ounce, the least since before
the Financial Times reported on gold's tariff-fears-led arbitrage, sucking yet more metal across the Atlantic.
That
NYLON gold arb widened again to more $40 per Troy just ahead of Friday's price drop in both Comex futures and London spot bullion.
The premium has now averaged $27 so far this year, significantly higher than the typical sub-$5 level seen before Donald Trump returned to the White House.
Comex-approved gold warehouse stocks rose by 99.4 tonnes in the week ending last Thursday, bringing the total increase since New Year 2025 up to 471 tonnes – equal to nearly 10% of annual global gold end-user demand.
Latest data on Comex trader positioning show that hedge funds and other leveraged speculators in US gold futures and options increased their bearish bets for the 3rd consecutive week over the 7 days ending last Tuesday, reaching the highest level in 10 months whilst also expanding their bullish positions for the 7th consecutive week to the highest level in 2 months.
Overall, this edged the net long position of Managed Money traders down by 6.4% to the lowest level in a month. However, it remained 82.4% greater than the 5-year average.
"Commodity trading advisors [aka CTAs] remain effectively 'max long' on gold but won't liquidate in any reasonable scenario for prices," reckons commodity strategist Daniel Ghali at Canadian stock brokerage TDS, "[because] the first threshold that can catalyse marginal liquidations lies south of $2800 per ounce."
"This [NYLON] situation, called gold dislocation, will ultimately lift the market itself," says Bruce Ikemizu, chief director of the Japan Bullion Market Association, highlighting that the futures markets in both Japan and the US are trading at significantly higher prices than London spot prices.
That's leading to gold being flown out of London and other parts of the world into the US, where the settlement period is shorter than Japan's gold derivatives contracts, offering a faster return.
"This is the main reason for gold's rally since the beginning of the year, and the important thing is that it will not be easily reversed...There is still a lot of room for gold to rise."
President Trump announced on Friday that import levies on automobiles could be imposed as early as 2 April, following his order last week to develop plans for reciprocal tariffs on multiple trading partners.
This move would be in addition to a 25% tariff on US steel and aluminium import set to take effect on 12 March.
"When trade contracts, gold takes off," explains bullion-bank HSBC's analyst James Steel, pointing to past examples during the Covid-19 pandemic and the global financial crisis.
"The more tariffs that go on, the more this is going to disrupt world trade, and the better it will be for gold."
Like New York, gold prices on the Shanghai Gold Exchange continued to show a premium over London prices on Monday, rising to $7 per Troy.
Reversing last week's discount of $12, that puts the Shanghai premium back in line with its recent historical average, indicating strengthening demand in the world's largest gold consumer market.
Trading volumes on the Shanghai Gold Exchange and also on the Shanghai Futures Exchange surged last week to their highest since April 2024, when
China's gold investment demand leapt even as prices jumped, due to deep pessimism over the world's 2nd biggest economy.
"This implies," says German refining group Heraeus, "that Chinese investors and market participants coming back from the Chinese New Year holiday are not yet being discouraged by new record highs in both US Dollar and Yuan terms."
Gold priced in Euros rallied 0.7% to €2767, while
the UK gold price in Pounds per ounce rebounded 0.5% to £2302, as European leaders including the UK Prime Minister prepared to hold an emergency summit in Paris to discuss Ukraine following Donald Trump's moves to agree an end to the war solely by the US negotiating with Russia's President Putin.
Prices for silver, primarily an industrial metal, today rose 1.1% to $32.48 per ounce.
That took the climb in
silver prices back up to 12.4% so far this year after sinking by 3.8% on Friday afternoon.
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