The price of gold has experienced a significant drop, the most in three months, as the U.S. seeks to clarify its tariff plan on bullion imports.
Gold Falls 2.1% After Tariff Clarification Plans
On Monday, the front-month gold futures contract on the NYMEX exchange dipped by 2.1% to $3,418 an ounce, marking the most significant drop in nominal terms since May 12. This fall comes after gold futures hit a record high above $3,500 last week, following a report that hinted at possible tariffs on gold bars, as reported by MarketWatch.
The U.S. Customs and Border Protection (CBP) had earlier stated that 1-kilo and 100-ounce gold bars "should be subject to tariffs," pushing gold futures above $3,500. However, the White House’s plans to clarify what it terms as “misinformation” about import tariffs for gold bars has led to a halt in bullion deliveries to the U.S. by some industry players, reported Reuters.
The gold price had already surged by around 30% this year due to the uncertainty surrounding U.S economic policy, prompting central banks to invest in the precious metal.
Another factor influencing the gold price is the hope for a ceasefire in the Ukraine-Russia conflict, with a meeting scheduled between U.S. President Donald Trump and Russian President Vladimir Putin in Alaska on Friday.
Tariff Move On Swiss Gold Jolts Global Bullion Trade
The recent tariff uncertainty follows the U.S.’s decision to impose tariffs on Swiss gold imports, a move that could significantly disrupt the global bullion market. This decision contradicted the industry’s prior expectations, leading to increased uncertainty in the precious metals market.
Potential tariffs on one-kilogram and 100-ounce gold bars—common in Comex contracts—have disrupted trade, with some Asian refineries temporarily halting U.S. shipments amid uncertainty. This development could have implications for bullion-backed ETFs, as a sudden jump in gold futures and a dramatic deviation from London spot prices have signaled increasing uncertainty in the precious metals market.
Price Action: ETFs such as SPDR Gold Shares (NYSE:GLD) and iShares Gold Trust (NYSE:IAU), which hold most of their physical gold in U.S.-based storage facilities surged over 29%, each, on a year-to-date basis.
On the other hand, abrdn Physical Gold Shares ETF (NYSE:SGOL) and SPDR Gold MiniShares (NYSE:GLDM), which hold most of their physical gold in Zurich and London gained over 30%, each, on a year-to-date basis.
READ MORE:
Image via Shutterstock
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
