U.S. tariffs caused uncertainty in gold markets - UBS

Published 08/08/2025, 13:18
© Reuters.

Investing.com - The United States has imposed tariffs on imports of one-kilo gold bars, according to a report from the Financial Times, causing a great deal of nervousness in the bullion market, said UBS.

A letter from Customs Border Protection - dated July 31 - said one-kilo and 100 ounce gold bars should be classified under a customs code subject to levels, according to the newspaper.

“This puts the global gold market in a similar situation it faced in Q1 this year in the sense that this is precisely what the market feared,” said analysts at UBS, in a note dated August 8.

“But the scenario right now is different in the sense that at the time, it was unclear whether gold and precious metals would be exempt, whereas now the FT article suggests that there has been confirmation from the U.S. Customs Border Protection agency that these two gold products in particular will be applied with tariffs.”

This creates an issue for the global gold market which uses Comex gold futures to hedge positions, with the assumption that it can easily import metal into Comex warehouses in the U.S. to physically settle contracts if needed. 

“The tariff adds costs to this process, and with the bulk of refining capacity sitting in Switzerland which faces 39% U.S. tariffs, these costs would be quite high,” UBS added.

The confirmation also implies that the market cannot react in the same way as before by pre-emptively moving metal into the U.S. to avoid tariffs, unless they somehow source them from non-tariff countries or internally in the U.S. 

“Gold exchange-for-physical positions are likely being closed out, resulting in the sharp rise in levels,” UBS added.

The gold industry may also react by changing delivery standards, whether by accepting other forms of good delivery gold or allowing settlement in other locations such as London, etc. 

Global supply chains may also try and adjust, with market participants finding ways to source from countries with zero tariffs or from the U.S., which is one of the top 10 gold producing countries. 

Any response is likely to take time. 

In the long run, the existence of U.S. tariffs on deliverable gold products raises the question on the role of futures trading in the U.S. as a means to hedge and whether other centres eventually step up as alternatives. 

“There is still a lot of uncertainty around all this and until there is clarity, we expect the gold market and precious metals markets more generally to remain very nervous. We would also be closely watching any spillover effects on the white precious metals,” UBS concluded.

 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.