World Gold Council Addresses U.S. Import Tax Measures and Their Impact on the Gold Market
World Gold Council Addresses U.S. Import Tax Measures and Their Impact on the Gold Market
The amount of gold reserves in London has decreased, but not as much as some might think
Juan Carlos Artigas, Head of Global Research, World Gold Council
John Reid, Senior Market Strategist for Europe and Asia, World Gold Council
Gold bars have moved to the West amid uncertainties regarding tariff measures.
At the end of 2024, the amount of gold reserves in the COMEX market (the Commodity Exchange located in New York, USA) began to rise due to concerns that tariff measures might impact gold imports. This sudden phenomenon surprised those tracking the gold market. Although gold has not been a direct target of tariff measures, overall tax concerns continue to affect gold prices and trading patterns. This trend has continued into early 2025, with the registered gold amount in the COMEX market increasing by nearly 300 tons (9 million ounces), while the eligible gold amount rose by over 500 tons (17 million ounces) (Chart 1).
Chart 1: Gold reserves in the COMEX market have reached the highest level since the COVID period
Gold reserves reported in the COMEX market for registered and eligible gold*
Source: Bloomberg, World Gold Council
Generally, physical gold and gold bars are more commonly found in the OTC (Over-the-Counter) market in London, as it is a major trading hub and often a lower-cost storage location for gold. Under normal market conditions, London is also a source for quickly sending gold to the U.S. However, in recent months, many gold traders have chosen to prepare in advance for the risks posed by tariff measures and have moved gold to the U.S. ahead of time to avoid potential future cost increases.
Amid reports of declining gold reserves, investors have questioned whether London, the largest OTC gold trading center, can cope with the current situation.
The amount of gold reserves in London has decreased, but not as much as some might think.
During the past COVID outbreak, the amount of gold reserves in the COMEX market increased while those in London decreased. However, the gold reserves in both markets eventually returned to normal. Currently, the gold reserves reported by the LBMA stand at approximately 8,500 tons (Chart 2), of which about 5,200 tons are held at the Bank of England (BoE), which operates differently from other commercial gold storage facilities. The longer wait times have created a perception of a gold shortage, but in reality, it may be more about logistical issues than an actual supply problem.
Chart 2: Gold reserves stored in London have decreased but remain above 2020 levels
Estimated gold reserves stored in London (units: tons)*
Source: Bank of England (BoE), London Bullion Market Association (LBMA), and World Gold Council
A diverse supply of gold can support the market's return to normal.
Trade data from the U.S. Census Bureau implies that some of the gold imported into the U.S. comes from Switzerland, and some of this gold may originate from the UK. Additionally, sources of gold include Canada, Latin America, Australia, and some from Hong Kong. Domestic mine production is also significant, as the U.S. is the fifth-largest gold producer in the world and can refine gold domestically.
Of course, the movement of gold into the U.S. from around the world may limit the amount of gold sent to other markets, including London. However, the World Gold Council believes that this impact is likely to be temporary, especially since gold has a diverse supply from both mining and recycling distributed globally.
Moreover, some signs indicating that the market is returning to normal have begun to emerge, such as the slowing accumulation rate of gold reserves in the COMEX market, a reduction in the spread between futures and current gold prices, and the bid-ask spread of gold ETFs, many of which store gold in London, remaining at a good level. Additionally, the gold lease rate has begun to cool down, with recent data showing that the lease rate is near 1% and below the record highs seen in January (Chart 3).
Chart 3: Gold lease rates have decreased after reaching record highs
Gold has not been a direct target of tariff measures, but the market's reaction to trade uncertainties has significantly altered trading behavior and impacted gold prices. The movement of gold from London to the U.S. and the increase in premiums in the COMEX market, along with concerns about the available gold supply, are largely driven by risk management decisions rather than actual supply issues.
As the backlog of gold withdrawal requests from the Bank of England decreases and is managed continuously, these fluctuations are likely to ease within the coming weeks.
This may not be the last time we see temporary anomalies in the gold market. However, several signs indicate that the strong and liquid gold market can absorb these impacts over time.
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