Comex Gold Stockpiles Soar, Lease Rates Jump as 'Trade Tariff Trump' Returns as President

GOLD PRICES rose on Monday ahead of the inauguration of US President-elect Donald Trump as the spread between New York Comex futures and London bullion quotes continued to widen and lease rates to borrow gold held very high, writes Atsuko Whitehouse at BullionVault.

 

With latest data showing that speculators in Comex gold futures and options last week cut their bearish betting as a group to the smallest level since the early stages of 2020's Covid-19 crisis, spot gold prices for London settlement today edged 0.2% higher to $2709 per Troy ounce, gaining nearly $20 from an overnight drop.

 

New York premiums, as shown by the most active Comex futures contract, widened to $40 per ounce above London prices, extending the dislocation caused by wild swings in the EFP contract for exchanging US precious-metal derivatives for physical bullion.

 

"The reason for the unusual premium on futures over spot prices is that the incoming Trump administration has said it will impose tariffs on all imports," explains Bruce Ikemizu, chief director of the Japan Bullion Market Association.

 

"The move to transfer physical bullion from London to New York before the new administration begins will tighten physical supply in London, causing lease rates to rise," Ikemizu goes on.

 

Meanwhile, "Speculators holding short positions in Comex futures" – meaning that they risk having to deliver physical bullion when the contracts expire – "will close those contracts, driving up futures prices further."

 

 

Latest data from US regulator the CFTC show that hedge funds and other leveraged speculators in Comex gold futures and options did indeed cut their bearish betting last week, slashing it by 25.3% over the 5 trading days ending Tuesday 14 January, down to the smallest since May 2020.

 

That group's bullish betting, however, grew by just 0.2% and only to the biggest in a month.

 

Producers, merchants and other commercial traders in contrast grew their bullish contracts by 42.6% and grew their short contracts by 14.8%, also the fastest growth since July.

 

Together, that swelled those commercial players' net position by 3.8% to the heaviest level of hedging in 11 weeks as gold bullion and futures prices both rose 0.6% to the highest Tuesday close in five.

 

Instead of reducing their short position, gold-industry traders have covered the risk of having to import metal to the USA with a 10% trade tariff to settle Comex contracts by flying bullion across the Atlantic into Comex-approved warehouses, where inventories "have swelled by more than 6 million ounces [186 tonnes] since the beginning of December," says a note from German bullion refining group Heraeus, "including additions of 676,000 ounces [21 tonnes] last Wednesday – the largest one-day addition of all time.

 

"Implied lease rates for very short-term gold lending [in London] are very high," Heraeus goes on, "implying that liquidity on a less than one-month delivery is very tight."

 

The cost of a 1-month lease to borrow gold in London was equivalent to 3.25% per annum this morning, according to data from Ikemizu at the JBMA, surging from a gold lease rate of just 0.08% on 2nd January.

 

Over in China, gold prices on the Shanghai Gold Exchange meantime fell 0.1% today from Friday's new all-time high of ¥638 per gram, but the premium to London quotes edged up $4 per Troy ounce – still only half the historic incentive for new imports to gold's No.1 consumer nation – as the Yuan rallied on the currency market to its strongest US Dollar rate so far in 2025 following a positive telephone conversation between Donald Trump and his opposite number in Beijing.

 

"I just spoke to Chairman Xi Jinping of China," Trump wrote on his Truth Social media platform. 

 

"The call was a very good one for both China and the USA." 

 

Asian stocks rose, led by gains in Japan and Hong Kong, while the People's Bank of China kept its benchmark loan prime rate unchanged as widely expected.