Gold Hits New Record Price on FT 'Shortage' Claims
Thursday, 1/30/2025 16:49
The GOLD PRICE in London set a new record on Thursday in US Dollar terms after the
Financial Times reported how a "surge" of shipments to New York – now running for over 7 weeks, in fact – is causing a "shortage" of bullion in the precious metal's central marketplace and storage hub.
With Donald Trump threatening to impose universal trade tariffs of at least 10% on all incoming goods, the
gap between London gold bullion and New York's nearest-month gold futures contract peaked at $40 per Troy ounce ahead of last week's inauguration.
That 'Nylon arb' then sank after the new administration said trade tariffs weren't a Day One priority, halving immediately to $20 and then dropping to just $7 on Wednesday.
But that gap surged Thursday following the
FT's front-page headline, ballooning to more than $30 per Troy ounce as London bullion and New York's Comex futures both leapt to new all-time high prices.
Lease rates for a 1-month loan of gold in London meantime soared to 3.3% per annum, jumping from 2.6% yesterday, while 3-month gold borrowing costs leapt by 1 percentage point to 2.34% according to data from Reuters.
"People can't get their hands on gold because so much has been shipped to New York," the
FT quotes one anonymous source, "and the rest is stuck in the queue.
"Liquidity in the London market has been diminished."
The Bank of England "[can] not...handle the onslaught," Reuters quotes a former US trading house executive, claiming that commercial banks wanting to borrow and fly gold to New York to avoid the possible risk of US trade tariffs are asking central banks holding bullion at the BoE to help them.
Amid the rumour and follow-up headlines following the
FT's report, gold in London today fixed at a new 3pm benchmark high of $2787 per Troy ounce, while the spot price rose towards $2795.
The CME derivatives exchange's February Comex gold futures contract traded $30 higher at a new record above $2825, with the exchange for physical (EFP) – a bilateral contract enabling a futures trader to swap their contract for bullion – also surging again.
"The markets will be sensitive to EFP [month-dated] changes into Feb 1st and gold [futures] first notice day (Jan 31st)," said a note from Swiss bullion refiners and finance group MKS Pamp on Monday, more than two days before the FT story went live online.
"[But] the increase of metal already in Comex vaults should offer comfort."
Flows of
London gold into New York jumped in early December, a month after Trump won the 2024 White House election.
Following Trump's inauguration, the 'premium' in Comex vs. London gold prices sank from $40 to $7 per ounce by last night. Yet the quantity of gold held in US warehouses approved to store Comex-compliant bullion has still ballooned by almost one quarter since Monday 20 January.
That's taken Comex warehouses'
total stockpiles above 946 tonnes – some 30 million Troy ounces – the most since 2022's retreat from the Covid Crisis surge of March 2020, when the UK's lockdown spurred a NyLon gap of $120 per Troy ounce.
The giant SPDR Gold Trust (NYSEArca: GLD) has expanded by 0.6% so far this week to need 860 tonnes of bullion, all but 2.6% of it vaulted in London, to back its shares in issue. That's the most since last Wednesday.
In contrast, the world's 2nd largest
gold ETF – the iShares IAU product, also listed in New York but holding over 80% of its bullion backing in London – has remained unchanged in size at its smallest in more than 2 months.
Silver's giant SLV ETF, which also holds 4/5ths of its bullion backing in London, has meantime shrunk by 1.2% to its smallest size since mid-July.
Silver on Thursday leapt to a 7-week high above $31.70 per Troy ounce for London bullion, while the most-active Comex silver futures contract peaked $1 higher still.
The European Central Bank meantime cut Euro interest rates on Thursday after new data said economic growth flatlined across the 20-nation single currency zone in the final 3 months of 2024, pulling year-on-year expansion down below 1.0% as national data said that Germany shrank 0.2%, France shrank 0.1% and Italy grew only 0.5%.
The US Federal Reserve, in contrast, held overnight Dollar rates unchanged on Wednesday for the first meeting since July, saying that it will wait either for inflation to slow further or for an economic or financial slump.
Oil stabilized today after erasing almost all of the New Year's 10.7% jump in Europe's benchmark Brent crude prices.
Copper in contrast held 7.7% higher in Dollar terms for 2025 to date, trading close to what was a 2-year high when reached on the way to new all-time records last spring.
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