U.S. tariffs driving gold futures to all-time highs, swiss bullion in focus
The Financial Times has reported a significant development in the gold market, with the U.S. Customs and Border Protection confirming that 1-kilogram and 100-ounce gold bars will now be classified under a customs code subject to higher import tariffs. This reclassification is part of a broader increase in U.S. import tariffs introduced by President Donald Trump, which took effect on Thursday.
The shift in customs classification is expected to impact countries like Switzerland, which serves as the world's primary hub for gold refining and export. The surge in gold futures to a record high on Friday was due to speculations over potential new U.S. tariffs on imported gold bars.
New York gold futures for December rose above $3,530, marking a significant increase from the current gold prices per ounce, which remain flat at $3,390.3. This surge occurred despite spot gold hovering around $3,390 after hitting its highest level since late July earlier in the session. The gap between futures and spot prices expanded to approximately $100 as a result of the speculations.
December gold contracts have a 1.18% daily gain at $3,494.3. The rise in gold futures follows the April record, amid heightened fears of a global recession and deteriorating U.S.-China trade relations. In April, gold reached a record high of $3,500.33 per ounce.
Citi, the New York-based investment bank, raised its short-term gold price target to $3,500 from $3,100, citing recession risks linked to the Fed's continued restrictive monetary stance. The CME Group's FedWatch Tool shows a 89% probability of a 25-basis-point cut at the next policy meeting.
However, it's important to note that the Federal Reserve has maintained its benchmark interest rate in the 4.25%-4.5% range since December 2024. The new tariffs target imports from more than 180 countries, including key trading partners such as Switzerland, Brazil, and India.
This development aims at addressing trade imbalances and protecting domestic industries. The bank also highlighted renewed trade barriers, noting that the brief tariff truce had ended in August, with new duties ranging from 15% to 50% now in force globally.
This news underscores the ongoing volatility in global trade relations and their potential impact on commodity markets. As the situation evolves, investors and market participants will continue to closely monitor these developments and adjust their strategies accordingly.
Investors in Turkiye, known for its strong gold market, might reconsider their investing strategies given the impact of U.S. import tariffs on gold, as the surge in gold futures has been linked to speculations over new tariffs. The reclassification of 1-kilogram and 100-ounce gold bars as a product subject to higher tariffs could affect the financing of gold investments for parties involved in the business, particularly importers from countries like Switzerland, a key hub for gold refining and export.
