Gold Leaps on Trump's Gaza Shock, China Price Flips to Discount
Wednesday, 2/05/2025 14:09
GOLD PRICES leapt yet again on Wednesday, hitting new records in Dollars, UK Pounds and China's Yuan, after US President Donald Trump shocked the world by declaring that the United States will "take over the Gaza Strip" for "long-term ownership" at a Washington press conference with Israeli Prime Minister Benjamin Netanyahu.
"We will level the site...create an economic development...a Riviera of the Middle East," said the celebrity real-estate mogul of the 140-square mile strip – where 90% of 1.9 million inhabitants have been displaced by Israel's bombardment and invasion
following Hamas' October 7th atrocities in 2023.
Gold in London spiked towards $2877 per Troy ounce around the 10:30 benchmarking auction, setting the 5th new daily high in a row.
New York's most-active gold futures hit $2901 at that time, also setting a new record high for the CME derivatives exchange's Comex contracts.
China's bullion market returned from the week-long Lunar New Year holiday to find global quotes $100 higher per Troy ounce.
That saw the Shanghai Gold Exchange's afternoon benchmark jump 3.7% in Yuan terms to a new all-time high at ¥668 per gram. That was the steepest session-on-session rise since 24 March 2020, when the UK's overnight imposition of Covid lockdowns sent global gold prices soaring, led by Comex futures for New York settlement leaping $120 per ounce above London quotes.
That record level above London quotes was matched last summer by gold prices in Shanghai.
But with China's gold-buying festival now finished for 2025, Shanghai gold today flipped from the $5 per ounce premium to London shown on Lunar New Year's Eve to a $5 discount. That deters new imports and suggests a weak level of demand relative to supply in the precious metal's No.1 mining, consumer, importing and central-bank buying nation.
Since 1st Jan 2025, that puts the average Shanghai premium to London quotes at $5.35/oz, matching the comparable period in 2022 but badly lagging the $17 incentive for new imports to China seen in early 2023 or the massive $47
premium for Shanghai gold at New Year 2024.
"Everyone I've spoken to loves the idea," Trump continued at last night's press conference, backed by Netanyahu and calling on US allies Jordan and Egypt to take in Gaza's Palestinian population as the US moves to own the Strip.
Both nations
immediately condemned Trump's comments, as did Washington's other Middle East as well
as Nato allies, plus Democrat US senators, Russia, China, and
human rights groups including the UN rapporteur for Gaza, variously calling his idea "unlawful, immoral, ridiculous, absurd, insane, terrifying, delusional, unacceptable."
The
UK Pound price for London gold touched a new all-time high above £2295, but the price in Euros held €2 shy of Monday's spot-market peak of €2761.
With lease rates to borrow metal still high in London amid
talk of a "shortage" in gold's central hub for trading and storage as imports to the USA jump for fear of Trump imposing trade tariffs on precious metals, "[recall] the panic in September 1999," says analyst Rhona O'Connell, now at brokerage StoneX.
O'Connell points to how the 1990s' trend for gold-mining companies to borrow and sell gold short during the precious metal's long bear market came to a sudden halt when, following
the UK's shock decision to sell gold from its national reserves, the Central Bank Gold Agreement between European holders put a cap on new sales from official holdings and also barred any new lending from their central banks' holdings.
"This caused a stampede to cover shorts," says O'Connell, "with gold-for-a-day shooting out to 40% [annualized borrowing rates]."
The US Fed's then chairman Alan Greenspan "said that central banks would stand ready to provide liquidity if necessary. I would not be surprised if they did so again."
China's CSI300 share index meantime began the Year of the Snake with a drop of 0.6% while Hong Kong's Hang Seng fell 0.9% from Tuesday's 3-month high.
US stock-market futures fell before the New York opening as shares in Alphabet (Nasdaq: GOOG) – owner of search-engine giant Google – sank by 7.1% and chipmaker AMD (Nasdaq: AMD) lost 9.6% in pre-market trade after quarterly reports showed weaker than expected earnings plus soaring costs from investing in AI technology.
Silver meantime spiked to a 3-month high above $32.50 per Troy ounce amid talk of
a London 'silver squeeze' before edging back as gold prices retreated from today's new records.
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