GLOBAL GOLDER MARKET Alert with threat of US tariffs

The simple possibility of taxing gold bars has made prices soak and revealed how global system depends on stability

The gold world, usually stable and governed by refined financial rules over decades, has been shaken last Friday for unusual news: the possibility of the United States imposing tariffs on imports of gold bars. The information, which emerged as a lightning in clean sky, caused a wave of instability in international markets, fired metal prices and put one of the most solid pillars of the global economy.

Gold, by tradition, is treated more as a financial asset than as a simple physical commodity. Its movement between countries is an integral part of the international monetary system, used by central banks, investment funds and large institutions to protect assets and diversify risks. Therefore, the simple suggestion that metal could be taxed as a common product – such as steel or electronics – was perplexed by operators, economists and industry executives.

It all started with a letter sent on July 31 by US Customs and Border Protection (CBP) to a Swiss refinery, one of the main links in the Global Gold Production Chain. The document, publicly released only days later, indicated that the metal bars could be targeted on the grounds that because they are standardized physical objects, they would fit into categories subject to import taxes. The message fell like a bomb in the already tense environment of global markets.

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Immediately, the reflexes were felt. Future Gold Contracts on the New York Goods Stock Exchange have fired, reaching record levels. Investors, fearing a break in the free flow of the metal, ran to buy protection positions. “It was a shock. Gold is not any product. It is a reserve asset, an anchor in times of crisis. Taxing it is like putting toll on global liquidity,” a trader with decades of experience in precious metals, who preferred not to identify himself.

The confusion, however, was short lived. Hours after the excitement, the government of then -President Donald Trump issued an informal statement suggesting that imports of gold bars would not be, after all, tariff. Rapid reversal calmed the markets, and prices retreated at the same speed with which they had risen. Even so, the episode left deep marks.

For many experts, the situation has exposed a hidden fragility in the international financial system. The gold in bars circulates through a complex and delicate circuit involving refineries in Switzerland, benches in London, Shangoi bags and consumer centers such as Mumbai, Dubai and Hong Kong. This ecosystem depends on the predictability, trust and exemption of commercial barriers. Any interruption can cause chain effects.

“The problem was that the government did not look beyond the question of physical format and did not take into account that this widget was actually gold,” said Robert Gottlieb, former neglectful metal and administrative director of JPMorgan Chase & Co., in a comment that summarized the feeling of much of the market. The analogy with a “widget”-a generic piece of manufacturing-was intentional: it was about showing the absurdity of fitting gold into common categories of industrialized products.

The network that supports the global gold market is both sophisticated and fragile. Bars are merged, certified, transported on high levels with a high level of safety and stored in underground coffers spread across strategic financial centers. In New York and London alone, there is more than $ 1.1 trillion in stored gold, much in the custody of giants such as JPMorgan and HSBC Holdings PLC. This metal mass is not just for safety – it serves as a balcony balcony negotiations in the British banks supervised, and for future -time trading contracts around the world.

The episode of tariffs, although reversed, rekindled the debate about the risks of impulsive trade policies. It was another chapter of the trade war led by Donald Trump, who, throughout his term, used rates as an economic weapon against China, European Union and other partners. This time, however, the target was an asset that transcends borders and governments: gold, a symbol of stability in times of uncertainty.

Although the threat was removed – at least for now – the fright was a warning. It has shown that even in a seemingly armored system, political decisions can generate instant turbulence. And that, in the financial world, not everything that glides is unshakable. Even gold, in times of geopolitical tension and commercial instability, can tremble.

In the heart of the global gold industry, Switzerland-small in territory, but giant in influence-found itself in the eye of the hurricane. With refineries responsible for processing about 70% of gold extracted worldwide, the Alpine country is the essential link between the mines of Africa, South America and Australia and the major financial centers of London and New York.

When the news of American tariffs spread, Swiss refinery executives reacted with increasing concern. A joint statement from a commercial group that represents these companies went straight to the point: any attempt to apply gold tariffs would make bars unfeasible to the United States.

“We are not talking about a product that can be easily replaced or redirected,” explained a executive director of a refinery based in Zurich, who requested anonymity for contractual reasons. “We are talking about a system that has been operating with surgical precision for decades. Such a commercial barrier dismantles the entire gear.”

The answer was immediate. Refineries in Asia, which usually embark gold directly to the US or do so through transhipment centers like Hong Kong, have temporarily suspended all sales to the US market. Caution dominated: No one wanted to risk having cargo retained in customs or being charged by unpredictable taxes. “It’s like we’ve been thrown in the dark,” said a Singapore merchant. “As long as there is no clarity, there is no business.”

In New York, the storm epicenter, panic was felt in the Comex Bolsa Operations rooms, part of the CME Group. The Golden Future Market, which was already being pressured by geopolitical tensions and expectations of inflation, went into screw. While contracts traded in New York fired – reaching a level never seen, over $ 3,530 the jaguar – the reference price set in London, known as the London Gold Fixingmore than $ 100 fell. Such a wide difference between the two main gold pricing centers had never been recorded before.

“This divergence is abnormal, it is perilous,” said Ross Norman, who accumulates four decades of experience in the precious metal market and today directs Metals Daily, one of the main portals of analysis and quotation in the sector. “Disbelief is not only due to the fact that several billions of dollars have been won and lost overnight. The problem is that we are not in a good position when things suffer interruptions. When things explode, there are many wounds.”

The mechanics behind this discrepancy is complex, but fundamental to the operation of the market. Usually, when the price of gold in New York rises a lot from London’s, there is an incentive to move European market bars to the American. This is done by melting the great London bars – known as Good Delivery Barswith about 400 jaguars-and reprocessing them in smaller bars, 1 kilo, accepted by Comex. This process, performed mainly in Switzerland, is expensive, but viable when the price difference pays off.

But with the threat of a 39% reciprocal tariff of Swiss imports – a measure provided for in the business regime adopted by the Trump administration – this economic equation collapses. For Switzerland’s gold transport to the US to become profitable again, the price at Comex would have to rise to about $ 4,700 the jaguar. An almost unimaginable level that would put gold out of the reach of most investors and institutions.

With the traditional paths blocked, the question was: Where would the gold go? The US could, in theory, seek alternative suppliers – Canada, Mexico, Australia. But the very threat of heavy tariffs against Canada and Mexico, also part of the Trump government’s commercial strategy, closed this route even before it was tested. “We are seeing forced isolation from the US market,” said Darwei Kung, head of commodities and portfolio manager of DWS Group. “Every day we learn more about new rules that can dramatically change the scenario of each commodity. Perhaps more changes result from negotiation in the coming days.”

Meanwhile, independent refineries, which operate with extremely tight profit margins-often less than 0.5% per transaction-were on the verge of operational collapse. Without access to the US market, one of the largest consumers of physical gold, its supply chain would collapse. The Swiss Commercial Association was emphatic: excluding these companies from such a relevant market would not only harm business, but the entire global gold trade system.

“Gold is not a good one,” said an executive from a Geneva refinery. “It’s a pillar of financial confidence. When you politicize it, it’s stirring the system structure.”

Faced with chaos, hope focused on Washington. Investors, banks, logistics companies and even foreign governments were anxious for a sign of sanity. And according to an authority near the White House, this sign may be on its way. The government would be preparing an executive order to clarify what it called “misinformation” about gold tariffs – an indirect way to admit that the initial decision was misunderstood, or perhaps even wrong.

If confirmed, the partial or total revocation of the measure could restore calm. But the episode has left a bitter lesson: in times of unpredictable trade policy, even the most stable metal in the world can lose its shine. And, as many in the market have already noticed, the biggest risk is not in the price of gold – it is in the fragility of the rules that support it.

With information from Bloomberg and news agencies*