'Liberation Day' Sees Gold and Silver Dealers Book Profit on Comex Trade-Tariff Arb
Wednesday, 4/02/2025 16:48
GOLD PRICES failed for the first session in 5 on Wednesday to make a new record high in London's bullion market, trading firm above $3100 as US Comex warehouse stockpiles swelled further and global equities also held flat ahead of US President Trump announcing his 'Liberation Day' trade tariffs on the import of foreign goods.
London
silver prices meantime rallied towards $34 per Troy ounce after falling to 2-week lows on Tuesday 50 cents beneath that.
"Tariffs work," declared
a White House press release as traders and investors awaited details of the goods and nations affected, citing studies and press reports from pro-Republican think tanks and media.
"This is an exciting day," said Kelly Loeffler, Trump-appointed head of the Small Business Administration, in an interview with Fox News re-tweeted by the President on the TruthSocial platform he owns, "...
the single greatest salvation for not just small businesses but for America."
But senior members of Trump's team fear that aggressive trade tariffs will prove expensive for US consumers and costly, therefore, for the Republicans' popularity, claims the Politico website, with Commerce Secretary Howard Lutnick – "perhaps the biggest proponent of Liberation Day" –
set to get blamed "should things go poorly."
The surge of US imports trying to beat Trump's tariffs has made a big dent in the world No.1 economy's GDP forecasts for January to March, with
the Atlanta Fed's latest prediction coming in at minus 3.7% annualized, or a still-massive 1.4% drop annualized after adjusting for
the tariff-led surge in gold bullion inflows.
With
New York warehouses already holding record quantities of gold and silver as dealers ship bullion into the USA for fear of Trump hitting precious metals with trade tariffs, latest data show yet more inflows, adding a further 14 tonnes of gold and 91 tonnes of silver on Monday.
The price gap between London gold and New York's Comex June futures contract today widened above $33 per Troy ounce, raising the gross incentive for flying bullion west across the Atlantic by $10 per ounce from Tuesday.
The same
NYLON 'arb' for silver also widened ahead of Trump's Liberation Day announcement, edging up to 74 cents per ounce.
"Dealers used physical delivery in the March contract to book profits on tariff-related arbitrage trades," says US dealer FideliTrade of Comex silver, noting that around 10% of open interest ran to physical rather than cash settlement –
a choice made by the seller, not the buyer.
In gold, the first day of April deliveries saw 6.6% of open interest go to physical delivery, FideliTrade says.
"Again, in normal times, this number would be less than 1%."
Gold priced in the Dollar held on Wednesday above $3100 per Troy ounce – a new record high when hit on Monday – but peaked only at $3135, some 0.4% below yesterday's fresh spot-bullion peak.
Gold priced in the Yuan had already failed to make a new high overnight in China – the precious metal's No.1 mining, importing and consumer nation, as well as the USA's No.1 trade surplus partner – for the first session in three, fixing ¥3 per gram below yesterday's fresh all-time record of ¥735.
Silver's rally pushed the Gold-Silver Ratio of the 2 formerly monetary metals' relative prices back down through 92, the
highest price for 'safe haven' gold in terms of industrially more-useful silver in 30 months set Tuesday.
"Every member of the Trump administration is aligned on finally leveling the playing field for American industries and workers," said White House spokesperson Kush Desai, refuting the Politico story and saying that Trump "has assembled the best and brightest trade team in modern American history to reignite American Greatness."
US copper futures meantime continued to trade around 14% above London's LME price, even as "the betting is that
copper levies will be set at 25%, matching the rate imposed on imports of steel and aluminium," according to Reuters columnist Andy Home.
Read here about
how Comex gold futures contracts and warehouses work.
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