Gold Cuts Feb' Gain to 0.7% as 'Trump Chaos' Whacks Stocks, Bitcoin and Bond Yields
Friday, 2/28/2025 15:57
The PRICE of GOLD on Friday extended this week's tumble from new all-time highs, losing 3.5% from last weekend as global stock markets also fell together with both industrial commodities and long-term bond yields amid the latest "policy chaos" from the new Trump administration in Washington.
With global stock markets losing 1.9% across February on the MSCI World Index, that cut gold's gain for the month to 0.7% while so-called 'digital currency' Bitcoin fell by nearly a quarter and the annual rate of interest offered by 10-year US Treasury bonds fell to the lowest since mid-December at 4.25%.
"Drugs are still pouring into our Country from Mexico and Canada," said US President Trump on his Truthsocial site overnight, confirming that trade tariffs against the USA's nearest neighbors will go into effect next Tuesday plus an additional 10% tariff on world No.1 manufacturing nation China.
"Gold has not been a direct target of tariffs," notes the mining industry's World Gold Council, "but market reactions to trade uncertainty has driven a significant shift in trading behaviour and impacted the gold price."
New York gold futures today continued to trade above London bullion quotes today, but the gap fell as low as $5 per Troy ounce – back to the typical pre-Trump level – despite Mexico and Canada accounting for the bulk of precious metal imports to the world's largest economy.
Then rebounding to $15 in late London trade, today's
NYLON gold arb compares to a peak above $40 on Valentine's Day, a spike near $58 at the end of January, and an average since the start of December of nearly $20 per Troy ounce.
Lease rates for borrowing gold in London also retreated as bullion and futures prices fell, sinking below 0.65% per annum for 1-month loans.
Down from 5.5% in early February, that suggests a marked drop in demand to borrow London gold for shipping to the USA.
The weight of US gold stockpiles in CME-approved warehouses leapt by 65.7% in the month to mid-February.
Growing only 4.3% across the past fortnight, it has still reached the most since the very peak holdings of the 2020 Covid crisis.
"The movement of gold from London to the US, rising Comex premiums, and concerns over availability were largely the result of risk management decisions [ahead of potential trade tariffs on bullion] rather than true supply issues,"
says the WGC.
There's
a "glut of gold" in New York vaults says CNBC, quoting BullionVault's analysis that
US gold stockpiles now total over 4 years' demand from the United States.
With trade tariffs set to raise the cost of living in the USA while Trump's White House this week
refused to call Russia the aggressor in the Ukraine war – marking its 3rd anniversary last Monday – at the same time as backing the return to Kyiv of
territory taken by Moscow's invasion, "The strategic realignment of the United States [means] risky markets are being hurt by the decline in US consumer optimism," says a note from French investment bank Natixis.
"The fall in bond yields, driven by the long end of the curve, reflects these concerns about the persistence of US exceptionalism."
The gold price in Dollar terms today fixed around $2832 per Troy ounce at London's 3pm benchmarking auction.
The lowest level since the first day of February, that slashed gold's monthly rise to only $20 after January's surge of 7.7% – the biggest 1-month gain since last March – but still took gold to its 9th new record-high monthly close of the past 12 months.
That's the most since gold's big global-financial crisis top of summer 2011, which set all-time highs not beaten until the Covid crisis of 2020.
US stock markets, in contrast, have lost 2.2% across February, with the S&P500 price index making its steepest 1-month drop since last April's 4.1% loss.
With investors rushing into Western government debt amid what mainstream media from the New Yorker magazine to the Hindustan Times call Trump's policy "chaos", the annual yield offered to buyers of 10-year US Treasury debt has dropped by 0.35 percentage points as Washington's debt prices jump.
Bitcoin meantime lost 23.5% across February, trading almost 1/4 below mid-January's record highs above $106,000 with its steepest 1-month drop since June 2022.
Over the past 5 years, Bitcoin has shown average daily volatility on a 1-month rolling basis of 49.8%.
For gold priced in Dollars that figure reads 14.7%, and it's 17.7% for the US stock market's S&P500 price index.
Industrially-useful silver meantime lost 1.4% across February from last month's final London midday benchmarking, fixing today around $31.16 per Troy ounce.
That took the Gold/Silver ratio of the 2 formerly monetary precious metals up to 92.8, the highest since early-September 2022.
Crude oil this month dropped 4.0% against the Dollar while copper prices halved an earlier 12.0% jump.
"Now that Comex [gold] inventories appear to be well-stocked and the backlog of withdrawals from the Bank of England [in London] continues to be cleared," says the WGC, the
New York-London gold disruptions "should ease over the coming weeks.
"However, this period serves as a stark reminder that even indirect trade policy concerns can send ripples through global financial markets."
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