Gold and Silver Rebound as Comex-London Arb Winds Down
Friday, 3/07/2025 15:38
GOLD and SILVER both erased earlier losses in London on Friday, trading sharply higher for the week against a fast-falling Dollar while New York futures contracts erased almost all of their recent premium over global quotes after President Trump again rowed back from imposing trade tariffs on major suppliers Mexico and Canada.
Gold bullion hit $2930 per Troy ounce, reversing almost all of last week's 3.4% slump but losing another 0.8% from last Friday against the Euro currency and rallying only 0.9% in UK Pounds.
> US stock markets meantime rose, helping raise the MSCI World Index from Tuesday's 3-week low – but still more than 4.8% below mid-February's record high – after new data showed US unemployment rising and wage growth slowing in February.
With New York warehouses now holding
a record "glut" of gold equal to 5 years of domestic US demand while London vaults hold the least since before the Covid Crisis,
the NYLON arbitrage "is winding down" agreed banking and logistics executives BullionVault spoke to Thursday night at the LBMA's annual networking event.
The US set a new record trade deficit in goods for the 2nd month running in January, new data showed Thursday, importing $156 billion more stuff than it exported – a rise of more than 71% from New Year 2024 – as US businesses rushed to take delivery before Trump returned to the White House.
That record trade deficit included a record $20.5bn of "finished metal shapes" such gold and silver bullion bars, rushed into US warehouses as fears of US trade tariffs hitting precious metals saw Comex futures prices on the CME derivatives exchange leap as much as $50 and $1 per ounce respectively above London bullion prices.
Sucking in metal from around the world,
those Comex-London arbs today traded back down below $2 for gold and 25 cents for silver.
Lease rates for borrowing gold in London have also retreated but held firmer for the more industrially-useful silver and platinum-group metals.
One-month
gold lease rates on Friday steadied beneath 0.8% per annum, down from start-February's multi-year peak near 5.5%.
Costs to borrow 1-month silver in contrast held above 5.8% per annum, while platinum leases cost 6.8% annualized.
Professional gold vaults in London – heart of the precious metal's trading and storage network – ended February holding the least metal in 4 years according to data gathered and published by trade body the London Bullion Market Association.
Since the end of October, eve of Trump's election win, gold custody holdings at the Bank of England have shrunk by 4.8% – a 4-month pace beaten in mid-2022 and early 2012 – while commercial vault outflows have totalled just 1.1%.
"Gold is moving from BoE into the Loco London system," says the LBMA of
today's London vault data, "[and] also shows that the market dynamics that led to gold travelling to NY in recent months have somewhat eased.
"Silver outflows were slightly less than half in February compared to January.
World No.2 gold mining nation
Australia shipped a record quantity of the precious metal to the USA in January, new data shows.
Donald Trump yesterday
delayed most tariffs on Mexico and some on Canada for another month only 2 days after re-introducing them.
Average US wage growth as well as the number of employees added to non-farm payrolls both rose less than analysts expected from January's figures.
The jobless rate meanwhile ticked up to 4.1% after easing from last fall's 3-year high of 4.2%.
The Dollar sank to new 4-month lows on its trade-weighted DXY index, spiking the Euro up to fresh 17-week highs close to $1.0890.
Silver bullion in London meantime set its midday Friday benchmark price around $32.48 per Troy ounce, regaining all but 50 cents of last week's $1.80 plunge.
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