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Gold prices surged to a new all-time high before paring some gains, as trade-war concerns fueled safe-haven demand and signs of short-term market tightness persisted.
Bullion rallied 1.4 percent to exceed US$2,882.36 an ounce before retreating after Bloomberg reported that U.S. allies expect President Donald Trump’s administration to unveil a long-awaited plan to end Russia’s war in Ukraine at the upcoming Munich Security Conference in Germany.
According to Mining.Com, as monitored by Zambia Monitor, gold prices remained elevated, driven by trade war uncertainties, particularly between the United States and China.
“Markets are also watching for potential ripple effects on U.S. monetary policy, should tariffs reignite inflation,” the report stated.
Additionally, demand for gold has surged as major dealers seek to move metal to the U.S. before any new tariffs take effect.
This has driven one-month lease rates in London to about 4.7 percent, significantly above past levels near zero.
The rate reflected the return bullion holders in London can earn by lending their metal to other buyers short-term.
Bloomberg recently reported that the rush for gold led to weekslong queues at the Bank of England, where many central banks store reserves, as investors withdraw bullion to deposit with private banks and Comex depositories in New York.
This growing tightness in the market was noted by Rhona O’Connell, head of market analysis for EMEA and Asia at StoneX Group Inc., who explained that gold bars traded in London (400-ounce bars) are not suited for the Comex market (which requires 100-ounce or kilobars), necessitating refining in places like Switzerland.
“Metal is still flowing into Comex warehouses and elsewhere in the U.S.,” O’Connell said, adding that authorities might intervene by lending gold if market conditions worsen.
“If the market tightens further or risks becoming disorderly, I wouldn’t be surprised if the official sector steps in to inject liquidity, as central banks won’t tolerate a chaotic gold market,” she added.
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