Global bullion markets were thrown into turmoil after a surprise ruling from US Customs and Border Protection suggested that imported gold bars would be subject to tariffs, stunning traders who had assumed the metal would be exempt.
The move triggered a dramatic spike in New York futures, which hit a record high before retreating sharply when the Trump administration signalled it would issue an executive order to clarify what it called “misinformation” about the tariffs.
More than $1.1 trillion in gold bars is held in vaults in New York and London alone, much of it stored by major dealers like JPMorgan and HSBC.
The apparent decision, disclosed in a private letter to a Swiss refiner on July 31 and made public on Friday, immediately set off alarm bells across the industry.
Refineries in Switzerland — which account for more than 70 per cent of global refining capacity — play a critical role in converting large London-standard bars into smaller 1kg or 100-ounce bars deliverable on the Comex exchange in New York.
A Swiss trade group warned the tariffs would make US shipments unviable, while some Asian refineries temporarily halted US-bound sales.
In New York, futures on Comex briefly surged above $3,530 an ounce, creating a record price gap of more than $100 with the London benchmark. That spread, around 3 per cent, still fell far short of the estimated 39 per cent reciprocal tariff cost for Swiss shipments, meaning Comex prices would need to approach $4,700 an ounce to make such imports feasible.
The dislocation reflected not only panic buying but also severe liquidity stress in the futures market, where physical delivery depends heavily on Swiss-processed bars.
Dubai’s gold bullion market experts said while Friday’s panic may prove to be a false alarm, it has left traders acutely aware of how quickly gold’s finely balanced supply chain can be thrown into disarray, and how policy missteps can send prices whipsawing in a matter of hours.
Traders are watching for Tuesday’s US inflation data and Friday’s retail sales figures for fresh cues. A softer-than-expected consumer price index could reinforce expectations of monetary easing, potentially lifting gold back towards $3,420–$3,450.
Conversely, stronger data might embolden the dollar and pressure bullion towards the $3,350 range.
Market analysts said the scare added a fresh layer of safe-haven demand to gold, even as prices retreated from their intraday highs.
Dilin Wu, research strategist at Pepperstone, wrote in a note sent to media that “the main catalyst driving gold higher was the inclusion of key Swiss-manufactured bars under tariff coverage,” which strained liquidity in both London and New York. The resulting surge in Comex premiums, he added, was compounded by broader macroeconomic factors — particularly expectations of a dovish pivot by the Federal Reserve.
Ross Norman, a veteran trader and chief executive of Metals Daily, described the chaos as a stark reminder of the market’s fragility. “The disbelief isn’t just that several billion dollars were made and lost overnight. When things blow out, you get lots of injuries — and this was one of those moments,” he said
Robert Gottlieb, a former precious metals trader and managing director at JPMorgan Chase, said the problem lay in the policy’s blunt approach. “The government didn’t look outside the physical format and didn’t consider that this ‘widget’ was actually gold,” he noted, pointing out that tariffs would distort a market where bullion is more often traded as a store of value than as a manufactured good.
The shock ruling immediately triggered a chain reaction among bullion banks and traders. Large bars in London, normally melted and recast in Switzerland before shipment to New York, suddenly faced prohibitive costs.
Alternative suppliers such as Canada and Mexico offered little relief, with both countries potentially facing their own US tariff threats.
Independent refineries, already operating on razor-thin margins, warned of lasting damage to global trade flows if the US shut out Swiss refiners from such a significant market.
Traders said the tariff turmoil came at a time when slowing US economic data and shifting Fed rhetoric were already supporting gold prices.
The ISM services index fell to its lowest since December 2024, labour market indicators weakened, and several Fed officials signalled readiness for rate cuts. Markets now price in over a 90 per cent chance of a September cut, a backdrop that favours non-yielding assets like gold.
Rania Gule, senior market analyst at XS.com, said the metal’s inability to hold above the psychological $3,400 mark reflected short-term dollar strength and profit-taking ahead of key data releases, not a collapse in underlying demand. “The Fed’s tilt towards easing, combined with sustained central bank buying — including China’s ninth consecutive month of reserve additions — creates a solid price floor,” she said.
The confusion over tariffs is expected to linger until the White House issues its formal clarification. Darwei Kung, head of commodities at DWS Group, said investors should brace for continued volatility. “From day to day, we learn more about new rules that could dramatically change the landscape of each commodity. Perhaps more change will result from negotiation in the days to come,” he said. For now, the market remains in what analysts call a zone of “strategic anticipation” — caught between near-term uncertainty over US trade policy and the longer-term support from an easing Fed, geopolitical risks, and steady institutional demand.
