Gold futures for New York settlement continued their upward trend on Friday, trading significantly higher than spot London bullion prices, extending a dislocation sparked by President-Elect Donald Trump’s trade policy. Trump has vowed to impose a 10% tariff on imported goods to the U.S. once he takes office on Monday, fueling the surge.
Comex February contracts for gold traded at $2,748 per troy ounce, marking the third consecutive week of gains, while London bullion fixed at $2,713 during the city’s 3:00 pm auction.
The rise in New York futures prices has led to a surge in gold shipments from London to the U.S., as investors rush to move metal ahead of the potential impact of Trump’s tariffs. Friday’s closing in London marked the highest finish for the metal since the eve of Trump’s historic election win.
Trump’s inauguration coincides with Martin Luther King Jr. Day, which will see U.S. markets, including stock, bond, and precious metal derivatives, close in honor of the civil rights leader. U.S. equities followed global market trends, with the MSCI World Index rising 2.7% from the previous Friday, hitting its highest level since Boxing Day.
Bond prices also rose, reducing long-term borrowing costs for the second time in the last six weeks. The 10-year U.S. Treasury yield dropped by nearly 0.2 percentage points, despite strong U.S. industrial output data failing to offset the effects of weaker inflation and retail sales figures.
As the gold market experiences a “blistering rally,” French bank Société Générale is re-entering the precious metals sector after stepping away from physical bullion in 2019, a year before gold saw its most significant price increase in a decade during the COVID-19 pandemic. Japanese trading house Mitsui, which exited the bullion market in 2015, also plans to return to global precious metals trading.
Despite gold’s rally, which has driven prices in Yuan, Euro, and British Pound terms to new all-time highs, the world’s largest gold-backed ETF, the SPDR Gold Trust (GLD), saw a 0.8% decline this week. Meanwhile, silver’s SLV ETF increased by 0.7% as silver prices aimed for their fourth consecutive weekly gain. By Thursday’s close in New York, silver was fixing at $30.60 per troy ounce, before dipping 40 cents following U.S. data releases on Friday.
Bank of America notes that the silver market remains in deficit, with limited growth in mine production providing key price support. Silver is trading at a premium in India, indicating strong demand, while Chinese consumers are paying higher prices to secure the metal.
Platinum prices, on the other hand, fell by 1.8% this week, despite strong demand in the U.S. ahead of Trump’s potential trade tariffs. London’s physical platinum market has returned to backwardation, with prices for immediate settlement surpassing those for longer-term delivery. Additionally, diesel prices, for which platinum is critical in catalytic converters, have surged due to new U.S.-EU sanctions on Russia, further tightening the market.
Platinum dropped to $943 per troy ounce, while palladium, often used in gasoline-powered vehicle catalysts, rose to $952, surpassing platinum for the second consecutive session after a month of trading below it. Last year, palladium averaged $30 per ounce more than platinum, marking the narrowest gap since palladium overtook platinum in 2017.
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