In uncertain times, people look for security. And what could be considered more secure than the indestructible precious metal gold?
For the first time in history, the price of gold temporarily rose above the $3,000 per troy ounce (around 31.1 grams) mark Friday morning.
The continuing geopolitical risks and rising fears of a further escalating trade dispute and additional tariffs have caused the price of the precious metal to rise further.
Fear of Gold Tariffs
While the uncertainty is already causing a high demand for what is considered a safe investment, there is an additional factor. According to a report in the «Financial Times», a significant shift in physical gold holdings from London to New York can currently be observed.
This is explained by fears that Donald Trump's administration will introduce a tariff on imports of physical gold in addition to the entire range of goods that have recently been subject to punitive tariffs.
This has created a price differential between London and the US, which several players use for arbitrage trading. In recent months, more than $61 billion worth of gold bars have flowed into the US as traders tried to avoid the potential levies. This has distorted US trade data and caused a bottleneck in London, the world's largest gold trading center.
Detour Via Switzerland
According to the report, the Swiss gold smelter Argor-Heraeus also benefits from this shift. As the gold in London is usually stored in 12.5-kilo bars (400 oz), the 1-kilo bar is common in the USA. On its way to the USA, the gold makes a stopover at the refinery in Mendrisio in Ticino to be remelted into the smaller format.
The smelter is currently working around the clock, the company's CO-CEO Robin Kolvenbach told the newspaper. «Demand has risen quite sharply. Normally, a peak in demand lasts one or two weeks. But a peak like the one we are currently experiencing, which has lasted for more than three months, is quite normal.»
