Gold Futures Volatility Spikes Amid Tariff Confusion

 

Gold Volatility Spikes Amid Tariff Confusion

(Bullion News Network) – Gold futures started Friday morning strong as markets fretted over the possibility that widely traded Swiss gold bars may be hit with tariffs. On Thursday, news outlets reported that U.S. Customs and Border Protection had moved to apply additional tariffs to kilo and 100 ounce gold bars, two of the most commonly traded “good delivery” gold bars on the market. These gold bars are primarily produced by Switzerland, making up a significant percentage of the nation’s annual exports. Fearing an additional tariff on good delivery bars, gold futures soared to an all-time high Friday morning. Gold futures peaked at $3,534.10, up nearly $100 from Thursday. 

Prices retreated again after the White House stepped in to clarify. A White House official spoke to CNBC, saying that the administration plans to “issue an executive order in the near future clarifying misinformation” about how specialty products, specifically gold bars, will be impacted by the new tariffs. Gold futures shed over $30/ozt in the immediate aftermath of the announcement but still managed to close at an all-time high. A new 39% tariff on Swiss exports to the United States kickstarted the controversy. Friday morning, a statement from the Swiss Precious Metals Association cautioned consumers that the new tariffs could “negatively impact the international flow of physical gold.”

As a longstanding advocate for responsible sourcing, supply chain transparency, and international trade compliance, ASFCMP supports efforts to enhance regulatory clarity. However, the Association is concerned that this specific clarification may negatively impact the international flow of physical gold.

Retail gold prices were relatively unchanged by the news. The spot price of gold hovered at around $3,400 per troy ounce throughout the day on Friday, closing at over $3,400 for the first time since July 22nd. Silver prices similarly moved little, gaining just $0.12 per troy ounce and pushing closer to the $38.50 line. The price action drove the gold-silver ratio marginally lower by 0.12:1 to settle at around 88.50:1. The biggest market movement on the retail side came in the palladium sector, where the spot price of palladium dropped by nearly $36/ozt. This move widened the platinum-palladium ratio; platinum now has an advantage of nearly $200/ozt over palladium. 

Institutional investors are likely awaiting more clarity from the White House about how the new Swiss tariffs will impact the precious metals trade. Switzerland is the world’s largest refiner of gold, and Swiss gold bars frequently change hands on major stock exchanges, including COMEX. Given the price retraction in the wake of the White House’s statement, it seems likely at this point that the Trump administration will exempt the Swiss gold bars from being tariffed. If the tariffs do apply to gold bullion bars, the economic policy could have major implications for the global precious metal trade. 

Swiss Precious Metals Association President Christopher Wild noted that the U.S. and Switzerland have a longstanding economic relationship concerning the trade of physical gold:

We are particularly concerned about the implications of the tariffs for the gold industry and the physical exchange of gold with the U.S., a long-standing and historical partner for Switzerland.

The White House’s rapid response to the controversy pulled gold futures back, but the precious metal’s volatile reaction to the news may underscore the susceptibility of even historically safe assets to uncertainty-based price swings. Reuters quoted Susanna Streeter, a market and money analyst at Hargreaves Lansdown. “Gold’s panic ascent shows that even safe haven assets are not immune to the volatility unleashed in the confusion of the tariff age,” Streeter said. Streeter isn’t wrong; gold prices have been highly susceptible to volatility throughout the year in the wake of tariff announcements, retractions, and other controversies from the White House.

As of now, it appears that the White House is preparing to exempt Swiss gold from the new tariffs on Switzerland. Further developments in this story could directly impact the gold market, so investors should keep a close eye on it as more information comes out. The Swiss Precious Metals Association has vowed to work with “all relevant stakeholders” to help resolve the situation. 

Next week, the key economic data report to look out for will be the Consumer Price Index (CPI), one of the core measures used to assess inflation in the United States. Federal Reserve expectations have shifted over the past couple of weeks following a worse-than-expected jobs report that led to the firing of the Bureau of Labor Statistics head. CME FedWatch now projects an 89.1% probability that the FOMC will vote to cut rates by 25 basis points in September, up from 80.3% one week ago and 60.8% on July 8th. Gold prices moved little in response to the adjusted rate cut projections on Friday, with the tariff turmoil likely playing a larger role in investors’ bets.