Billions made and lost in a blink as gold rides Trump rollercoaster
The apparent decision by the US Customs and Border Protection agency – announced privately in a letter to a Swiss refiner on July 31 and made public on Friday – sent gold futures in New York soaring to a record, as insiders warned the tariffs would have dire consequences.
Then, just as quickly, prices tumbled after the Trump administration suggested imports of gold bars wouldn't face tariffs after all. It was the latest example of President Donald Trump's trade war triggering wild gyrations in markets, whether for equities, raw materials or finished products.
Gold bullion is typically treated more as a financial instrument than a physical product, and slapping tariffs on it would have such profound consequences that many traders argued the ruling had to be a mistake.
'The problem was that the government didn't look outside of the question of the physical format and did not take into consideration that this widget was actually gold,' said Robert Gottlieb, a former precious metals trader and managing director at JPMorgan Chase & Co.
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A complex and sometimes fragile system for making and moving gold bars underpins the global market for the metal, including the futures exchanges in New York and Shanghai as well as a huge over-the-counter market overseen by London banks.
Key consumer hubs in Mumbai, Dubai and Hong Kong rely on it as well.
There is more than $US1.1 trillion ($1.7 trillion) in gold bars stored in vaults to underpin trading in New York and London alone, with much of it stored by major dealers including JPMorgan and HSBC Holdings.
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