Trump tariff concerns drive gold rush to New York, draining London reserves: Report

London bullion market players are racing to borrow gold reserves from central banks, which store bullion in London. According to news agency Reuters, this follows a surge in gold deliveries to the US, which was fueled by speculation of potential import tariffs after Donald Trump took charge as the US President.

According to the report, the minimum waiting time to load gold out of the Bank of England (BoE), which stores gold for central banks, has reached four weeks. In normal times, the release time is a few days or a week. US President Trump has not mentioned precious metals in his tariff plans yet, but the risk on the commodities has been enough to boost gold deliveries to New York.

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Trump tariff plans weigh on gold reserves

This was partly because the market sought to hedge its positions on the US COMEX exchange and partly because it sought to benefit from a jump in the price premium of COMEX futures over London spot prices. Reportedly, London is home to the world's largest over-the-counter gold trading hub, where market players trade directly with each other rather than via an exchange.

The size of so-called Loco London free float - the amount of gold readily available to the London OTC market stored in London - has fallen after the jump in supplies to New York. Over the last two months, 12.2 million troy ounces of gold were delivered to COMEX-approved warehouses, raising stocks there by 70 per cent to 29.8 million ounces, the highest since August 2022.

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According to the report, the deliveries to the US left less free-float metal in London vaults—metal that is not owned by central banks or holdings of physically-backed gold exchange-traded funds. This, in turn, boosted demand from London players who are ready to lease their gold and make it available to the OTC market.