In times of economic and geopolitical uncertainty, investors seek stability in safe-haven assets, and gold has once again proven its enduring appeal. For the first time in history, gold prices briefly surged above $3,000 per troy ounce (31.1 grams) on Friday morning, marking a significant milestone in the precious metal’s valuation.
Geopolitical Tensions Drive Gold Rally
The ongoing geopolitical turmoil, coupled with fears of an escalating trade dispute and additional tariffs, has fueled demand for gold. Investors are increasingly turning to the metal as a hedge against potential market instability and inflation.
Concerns Over Potential Gold Tariffs
Adding to the surge in demand is speculation that the Trump administration may impose tariffs on physical gold imports. A report by the Financial Times highlights a notable shift in gold holdings, with a large volume of bullion moving from London to New York in recent months.
The possibility of tariffs has led to a price differential between the two financial hubs, prompting traders to engage in arbitrage trading. In an attempt to bypass potential levies, over $61 billion worth of gold bars has been transferred to the US, straining gold supplies in London, the world’s largest gold trading center.
Switzerland’s Crucial Role in Gold Processing
The movement of gold has also benefited Swiss gold refiners, particularly Argor-Heraeus, which plays a critical role in adapting bullion for US markets.
London’s gold reserves are typically stored in 12.5-kilogram bars (400 oz), while the 1-kilogram format is more commonly traded in the United States. To meet market demand, gold is being routed through Switzerland, where it is remelted and resized at refineries such as the one in Mendrisio, Ticino.
According to Robin Kolvenbach, Co-CEO of Argor-Heraeus, the smelter has been operating at full capacity to accommodate the heightened demand. “Normally, a peak in demand lasts one or two weeks. But what we are seeing now—an unprecedented surge lasting over three months—is highly unusual,” he stated.
As global uncertainties persist, gold’s role as a safe-haven asset remains stronger than ever, and market watchers will continue to monitor price movements and trade developments closely.
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