Recently, the US government caused quite a stir in the gold market by suggesting some bars of gold, such as the 100-ounce and one-kilogram bullion bar, could face heavy import duties depending on their origin.
This announcement caused a major disruption, sending the gold price to new records.
The White House then stepped up, saying that they would be clearing things soon, and likely exempting those gold bars through executive orders, in an effort to bring stability to the market.
Why was there confusion over gold bar tariffs?
This whole mess began when US Customs and Border Protection issued a decision saying that the most popular sizes of gold bar, one kilogram and 100 ounce, traded at the Comex futures exchange, were subject to a code which was not on a list that exempted them from tariffs.
This meant that these bars, mainly coming from Switzerland, the world’s largest gold refinery, could be slapped a 39% duty, as part of Trump-era policies targeting Swiss exports.
The sudden change in gold prices caught many traders and refiners by surprise and disrupted the normal supply chain. The Swiss refineries halted the shipment of these gold bars to the US until they could determine the cost.
In terms of imports, the US spent about $24 billion on Swiss gold last year.
Gold futures in the US rose to an all-time record of $3,490 per ounce as the US market responded to concerns about supply and arbitrage opportunities.
Swiss Precious Metals Association also didn’t keep back, stating that the tariffs will “stop” the gold exports from Switzerland to the US and cause a major market disruption.
The group also said that tariffs might create a gap in prices between US Comex and London Bullion Market Association, which could cause the entire sector to be affected.
The UK, South Africa and Canada, as well as other major gold-players, are closely watching this situation, concerned about the possible ripple effects.
White House Steps in
The White House has stepped in to clarify the situation amid the chaos on the markets and the wild swings of prices. Officials have said that they plan to issue an executive order in the near future to clarify those tariffs on gold bars and other specialty products.
It is the goal to keep gold bars of one kilogram and 100 ounces tariff free, as they have been for many years.
Gold futures settled back at around $3.450 per ounce after the announcement.
Market participants breathed a huge sigh because earlier confusions had rattled both investors and those involved with trading gold around the globe.
The executive order will end the unrest that has refiners and banks on edge, as well as traders, and stop any further disruptions from spreading beyond the US.
Investors in India are also affected, as the gold price soared during this chaos.
Indian gold prices reached around Rs. 100,942 for 10 grams of 24-karat. This was due to safe-haven purchases and concerns over global tariffs affecting supply.
The post US Gold Bar Tariff Twist: How Customs Ruling Shaked Global Bullion Markets may change as new information becomes available.
