Gold prices are experiencing a normalization after a period of extreme dislocation caused by fears of potential tariffs from President Trump. Gold is currently trading at $2914.81, down $3.15. Silver is trading at $32.39, up 41 cents. Recently, the price differential between New York’s Comex and the London spot market has significantly decreased, indicating that the rush to ship gold to the U.S. is subsiding. This shift has seen the gap narrow from about $60 per ounce in January to approximately $10, reflecting an end to the arbitrage opportunities that had previously incentivized traders to send bullion to America. Additionally, borrowing costs for gold in London have returned to more typical levels, further signaling a reduction in market tightness as U.S. stockpiles at Comex depositories reach their highest levels in four years.
Despite the easing of price disruptions, uncertainty remains regarding whether gold will be included in Trump’s tariff measures, which could potentially widen the price gap again. The high inventory levels on Comex provide some assurance to dealers who typically prefer holding stock in less expensive London vaults. However, as storage costs in New York remain elevated, there may be a future shift where traders move their gold back to London or other locations based on demand dynamics, as noted by commodity experts.
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