Correction: In the previous version, Kitco News misquoted Rhona O’Connell’s analysis of gold’s recent market volatility. The article has been corrected to better reflect her comments.
(Kitco News) - The gold market is still awaiting official word from the White House regarding potential tariffs on imported 100-ounce and one-kilogram bars. However, in a social media comment, President Donald Trump announced that the precious metal will not face import fees.
While some market players will be breathing a sigh of relief, analysts are warning investors that the gold market could continue to experience volatility this week. As clarity over gold tariffs emerges, it is expected to deflate the significant premium in U.S. gold futures compared to spot prices in London’s Over-The-Counter market.
Currently, spot prices are outperforming Comex gold futures. Spot gold last traded at $3,352.10 an ounce, down 1.32% on the day. Meanwhile, December gold futures are down 2.42%, last trading at $3,406.90 an ounce.
The gold market experienced significant volatility late last week after the Financial Times reported that a July 31 letter from U.S. Customs and Border Protection to a Swiss refiner stated that 1-kilogram and 100-ounce gold bars would be subject to costly tariffs. With Switzerland's recently announced 39% tariff rate—among the highest the Trump administration has imposed—precious metals markets went into a panic.
A scramble for physical bullion, as imports into U.S. markets dropped on Friday, pushed the premium on Comex to roughly $100 over London prices.
Rhona O’Connell, Head of Market Analysis at StoneX, said in a note Monday that last week’s volatility in price premiums, while high, is in line with trading activity since the start of the year.
“While the spread between spot and December expanded to just over $100 at one point, and thus hit the headlines with words like 'record', it wasn’t actually that dramatic. The average premium between spot and the active contract has averaged 5.4% since the start of 2024 and 3.1% since the start of this year. Last Friday, the percentage premium was just 2.8% before sliding back to 1.7% this morning (Monday), which is where it was last Thursday,” she said.
Looking beyond U.S. domestic policy volatility, O’Connell noted that physical markets are quiet virtually everywhere due to economic uncertainty and the time of year.
“Discounts in Dubai have helped to prompt some interest in India and there is a scattering of demand in parts of the Middle East, but conditions remain seasonally slow,” she said.
