The global gold market has been thrown into fresh turmoil after a US government agency indicated that bullion would not be exempt from tariffs.
Imports of one kilo and 100-ounce gold bars are subject to reciprocal tariffs, according to a July 31 Customs and Border Protection letter reviewed by CNN. The revelation perplexed Wall Street traders, who had expected bullion to be exempt from duties.
A tariff on gold would hike the cost of importing the metal into the United States, throwing a costly wrench into a global supply chain that flows between hubs in London, New York and cities in Switzerland.
The White House on Friday afternoon called potential tariffs on gold “misinformation” and said it would clarify the issue.
“The White House intends to issue an executive order in the near future clarifying misinformation about the tariffing of gold bars and other specialty products,” a White House official confirmed to CNN on Friday afternoon.
Gold prices in New York, which had jumped 1%, pared their gains and traded up just 0.2% by Friday afternoon.
President Donald Trump’s tariff campaign has included a 39% tariff on imports from Switzerland — among the highest rates that were implemented on Thursday.
The July 31 CBP letter clarified that gold bars imported from Switzerland are subject to reciprocal tariffs. The Financial Times first reported the ruling.
The revelation of a potential tariff was a surprising development for the market, which had been hoping to avoid the logistical headache of import duties.
“Gold traders will be grappling with the implications of previously unanticipated tariffs,” Ulrike Hoffmann-Burchardi, head of global equities at Swiss bank UBS, said in a Friday note.
Gold futures traded in New York surged more than 1% late Thursday to a record high above $3,500 a troy ounce before paring gains. Gold traded at $3,460 a troy ounce as of Friday afternoon.
Gold tariff surprises Wall Street
Gold, a safe haven during uncertainty, has soared 31% this year as investors have sought places to park their cash amid trade and geopolitical turmoil. A tariff could boost the price of gold but would put a strain on the supply chains underpinning the global market.
Gold bullion is used to back the financial contracts traded on the Comex exchange, a hub for trading based in New York. These gold bars are widely imported from Switzerland.
A fresh tariff on gold imports would be an additional factor for Wall Street traders to consider when buying or selling gold on US-based exchanges.
Futures contracts on US commodities exchange Comex are often used to hedge positions, with the assumption that traders can easily import gold into the United States to physically settle contracts if needed, said Joni Teves, a strategist at UBS, in a note.
“The tariff adds costs to this process, and with the bulk of refining capacity sitting in Switzerland which faces 39% US tariffs, these costs would be quite high,” Teves said.
“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,” she added.
The rise in New York gold prices held around 1% before retreating, which was not an enormous gain for the yellow metal. It was a signal that some traders expected the tariff ruling could be revised.
“The market is waiting for more clarity,” said Rob Haworth, senior investment strategy director at US Bank’s Asset Management Group. “I think this is a market with significant questions about is this really what was intended?”
A wrench in global trade
While the price of gold traded in New York rose, the price of gold in London was relatively unchanged, reflecting a growing premium for the New York market.
Ole Hansen, head of commodity strategy at Saxo Bank, said a tariff on gold could distort the market and make the New York exchanges less appealing for the global market.
“These developments raise serious questions about the ability of the NY futures markets to offer a stable and trustworthy trading environment that offers the best price discovery — one that increasingly appears vulnerable to being hijacked by Trump’s shifting tariff agenda,” Hansen said.
US Bank’s Haworth similarly said the tariff on gold imports would disrupt the current organization of the global gold trade. The New York market could lose its appeal for global investors if they have to reckon with the cost of tariffs, he said.
And it’s not just a concern for Wall Street. Gold comes in all shapes and sizes: from coins and jewelry, to bullion used to back financial contracts, to physical bars sold at Costco. The ruling could have significant implications for the global supply chain.
“We are particularly concerned about the implications of the tariffs for the gold industry and the physical exchange of gold with the US, a long-standing and historical partner for Switzerland,” Christoph Wild, president of the industry group Swiss Association of Manufacturers and Traders of Precious Metals, said in a statement.
CNN’s Elisabeth Buchwald, Olesya Dmitracova and Matt Egan contributed to this report
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