When a bureaucratic letter from US Customs and a four-word social media post from President Trump can shake one of the deepest commodity markets in the world, the real lesson is not in the headlines. It is in the plumbing. Late last week, the global gold market experienced a momentary rupture that should trouble anyone whose exposure is confined to futures or exchange-traded products.
The trigger was a formal communication from the US Customs and Border Protection to a Swiss refiner. The letter declared that one-kilogram and one-hundred-ounce gold bars would be subject to import tariffs under Washington’s “reciprocal” trade policy. Gold has historically been exempt from such measures because it is treated as a monetary asset rather than an industrial good. This abrupt departure spooked the COMEX futures market in New York, sending prices to over $3,530 an ounce and creating a spread of more than $100 above the London spot price.
Such a dislocation is still headline-grabbing. Normally, bullion should flow freely between London, New York, and the Swiss refineries that convert 400-ounce London bars into smaller, COMEX-deliverable units. The tariff ruling immediately made that conversion uneconomic. Switzerland’s major refiners paused shipments to the United States. Asian refiners followed suit. The carry trade that underpins much of COMEX liquidity – buying spot, selling futures, and delivering into New York, no longer worked when faced with a 39 per cent levy.
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By Monday, the drama was over. President Trump announced on Truth Social that “Gold will not be Tariffed!” Futures fell, the spread narrowed, and the immediate crisis passed. Yet the episode exposed a fragility in the market’s structure. COMEX futures detached from the physical market they are meant to track, not because of any shift in underlying demand, but because a single policy announcement disrupted delivery routes.
It was not the first time this has happened. In 2020, the COVID lockdowns and restrictions on air freight severed the transatlantic bullion supply chain. That event was driven by logistical breakdown. This time, the cause was political discretion. That distinction matters, because policy shocks are not only possible but increasingly frequent.
For investors, the volatility in futures prices was headline-grabbing, but it was not necessarily high risk. Volatility is the day-to-day fluctuation of prices. Risk is the potential for permanent loss of capital. For those holding allocated, physical gold in secure jurisdictions, the tariff scare was irrelevant to ownership. For leveraged futures traders or ETF investors, however, it created a tangible risk that settlement could be delayed or altered.
The market data tell the story. According to the World Gold Council, spot prices moved only about 1.5 per cent over the month, ending near $3,376 an ounce. COMEX traders reduced net long positions by 30 per cent, shaving roughly four per cent off returns. Global gold-backed ETFs added 15 tonnes, largely in Europe and Asia, and central banks acquired 55 tonnes, with China and Turkey leading the way. Beneath the surface, physical demand continued unabated.
The lesson is clear. Episodes like this should prompt investors to examine how their gold is held, who has custody, and in what jurisdiction. A statement showing “gold” is not proof of allocated bars held in your name. Concentrating all holdings in one country magnifies exposure to political decisions like the CBP’s. Maintaining liquidity and the willingness to act during volatile periods allows investors to turn market noise to their advantage.
The futures market remains an essential tool for price discovery and hedging, but it is not infallible. When it disconnects from the spot market, it tells you more about the mechanics of delivery than about the real value of gold. This event reinforced the London spot as the more reliable barometer of physical market conditions. For those who treat gold as a long-term store of value, that distinction is critical.
We explore this event in detail on our GoldCoreTV YouTube channel, analysing what it means for gold investors and how to protect against similar shocks. Watch the full discussion here: GoldCoreTV on YouTube.
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