I’m steering clear of any gold trading ATM; numerous factors contributed to this significant uptrend. Trade cautiously.
Traders are scrambling to fly gold bullion across the Atlantic — here’s why
-
Gold is being flown from London to New York in unusually high volumes.
-
Gold held in the UK’s central bank has been trading at a discount due to tariff fears.
-
The metal has been trading at record highs of about $2,900 an ounce this month.
Significant amounts of gold are being taken out of the UK’s central bank and flown to New York, driven by fears about the impact of tariffs threatened by President Donald Trump.
The uncertainty means gold held at the Bank of England has been trading at a discount to the wider market, and traders face lengthy delays to make withdrawals.
Some think Trump could impose tariffs on raw materials coming into the US, including gold, Michael Haigh, head of commodities research at Société Générale, told The Financial Times. “There is a bit of a scramble among participants in the gold market to protect themselves,” he said.
The Bank of England holds bullion for the UK Treasury, financial institutions, and other central banks.
Premiums and discounts on gold are generally not more than a few cents per ounce.
London-based bullion dealing company Auronom told Business Insider last week that prices for gold held at the Bank of England were being quoted at about $5 an ounce below the New York spot price. The difference has been as high as $20, The Wall Street Journal reported on Friday.
Traders face long waiting times to get bullion out of the Bank of England.
“The usual smooth running of the system doesn’t generally face this kind of level of huge demand,” Louise Street, senior markets analyst at the World Gold Council, told BI.
The Bank of England holds about 400,000 gold bars and is the second-largest custodian of the precious metal after the New York Federal Reserve. Most physical gold trading happens in London, while the futures market is focused on New York.
Last month lawmakers on the UK’s Treasury Committee asked Bank of England Governor Andrew Bailey if he was concerned by the transfers. He replied, “London remains the major gold market in the world. If you are involved in that market and want to trade or use your gold, you really need to have it in London.”
