Gold Dealers Rush to Bridge Transatlantic Price Gap Amid Tariff Turmoil

Banks like JPMorgan and HSBC are leading the charge, leveraging their access to vast gold reserves to capitalize on the discrepancy, while smaller players grapple with logistical bottlenecks and soaring borrowing costs.

The price of gold in New York has surged 11% this year, hitting $2,909 per troy ounce, with analysts predicting it could soon breach $3,000 for the first time. Meanwhile, London prices lag by roughly $20 per ounce, a gap traders attribute to fears of U.S. tariffs disrupting European trade. This divergence has triggered the largest physical gold migration across the Atlantic in years, with dealers racing to move bars from London vaults and Swiss refineries to New York via commercial flights—the cheapest secure method.

The urgency stems from a perfect storm of market forces. Banks that hedged gold futures in New York at lower prices now face steep losses as Comex prices outpace London’s. To offset these losses, they must either buy back futures at a loss or deliver physical gold to fulfill contracts. The latter option, while logistically complex, offers a chance to profit from the price gap. JPMorgan, for instance, plans to ship $4 billion worth of gold to New York in January, though the exact motives—damage control or speculative profit—remain opaque.

Yet the operation is far from seamless. The Bank of England, which holds much of the world’s gold reserves, has become a chokepoint. A surge in withdrawal requests has created weeks-long delays, leaving bankers pleading for expedited access. “There are real logistical constraints,” admitted Bank of England deputy governor Dave Ramsden, noting the challenge of moving “quite heavy” gold bars under tight security protocols.

The crisis underscores the fragility of global gold markets, where even perceived risks—like Trump’s vague tariff threats—can trigger chaos. Manufacturers relying on gold are already reeling, with some losing money as they struggle to price products amid fluctuating rates. “The situation is very profitable for clearing banks and refiners,” said Kilo Capital CEO Wade Brennan, “but it’s unsustainable for those without access to physical gold.”

For smaller banks and hedge funds, the stakes are existential. With gold borrowing rates spiking due to scarcity, some face ruinous losses if they can’t secure metal to cover short positions. Citigroup, eager to join the elite club of banks storing gold in London, highlights the industry’s stratification: a few giants reap rewards, while others face ruin.

The gold rush also reflects broader anxieties about Trump’s trade war tactics. While his threatened tariffs on Europe may not directly target gold, the mere specter of disruption has warped market psychology. As one retired trader noted, the system is “failing” to connect eager borrowers with central banks holding idle reserves at the Bank of England—a disconnect emblematic of a market strained by geopolitical whims.

As flights laden with gold bars continue to bridge the Atlantic, the episode serves as a stark reminder: in today’s volatile world, even the oldest safe-haven asset isn’t immune to the whims of tariffs and tweets.