Donald Trump tariff sends gold to record high
In a shock move that blindsided the bullion market, US officials ruled that one kilo and 100 ounce bars should be subject to import duties.
US gold futures hit a record of 3.535 per troy ounce in Friday trading after an FT report revealed the plans.
Markets expect the price to continue to rise, prompting shares in London-listed miners Fresnillo and Greatland Resources to rise by 1.6 per cent and 3.8 per cent respectively.
Reports that gold bars will be hit by tariffs were a huge blow to Switzerland, the world's largest gold refining hub, which was already reeling from a 39 per cent levy imposed by Trump.
One-kilo bars are the most popular form of the metal traded on Comex, the biggest gold futures market, and make up most of Switzerland's bullion exports to the US. Switzerland exported £45.7billion of gold to the US in the 12 months to June.
This would be subject to a further £18billion in levies under Switzerland's 39 per cent tariff rate – which came into effect on Thursday.
Swiss officials this week met US counterparts in an unsuccessful bid to have the tariff rise overturned. It was unclear yesterday whether other types of gold, such as the 400 troy ounce bar used in London, will be subject to tariffs. It was also not clear when levies on gold would be imposed and if they applied to exports from all countries.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: 'Even safe-haven assets are not immune to the volatility unleashed in the confusion of the tariff age.
'Gold had been shining as a shelter amid the trade storm, but the bullion market has been blindsided by a specific threat of duties on gold bar imports into the US, sending US futures prices soaring to record levels.
'But it's also a reminder for investors to remain wary,' she added. 'Investing in gold is far from a one-way bet. It's often risen in times of economic or political crisis. It has also a history of losing its lustre.
'The tariff will definitely disrupt gold trade and Switzerland will bear the brunt of it.',
Zain Vawda, an analyst at Market Pulse, said. 'The move could also create supply bottlenecks which could push up the price of spot gold.'
Bob Haberkorn, market strategist at RJO Futures, said: 'I think you will see elevated safe-haven demand and heightened uncertainty on US gold supply. I expect gold to remain elevated until more information comes forth from the Trump administration on the 39 per cent tariffs relating to gold kilo bars.'
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