The Gold Rush: Why Demand for Gold Bars is Booming

Fears of US Tariffs Spark a Surge in Gold Trading

Gold markets are experiencing unprecedented demand, driven by fears that Donald Trump could impose tariffs on gold imports. Since December, traders have rushed to move billions of dollars' worth of gold to the US, pushing prices to a record high of nearly $3,000 per troy ounce.

This scramble has transformed the global gold trade, creating supply shortages in London, bottlenecks in Switzerland, and record stockpiles in New York.

Why is Gold Moving from London to New York?

The gold supply chain is more complex than many realise. London and New York use different bar sizes, meaning gold must be melted down and recast before reaching its final destination.

• London’s market trades in 400-troy-ounce bars (about 12.5kg each).
• New York’s Comex exchange deals in 1kg bars, which are roughly smartphone-sized.

As a result, gold travels through Switzerland, home to the world’s largest gold refineries, where 400-ounce bars are melted and reshaped to meet US specifications.

How Switzerland Became the Centre of the Gold Trade

At the Argor-Heraeus refinery in Switzerland, furnaces have been running non-stop since December. Robin Kolvenbach, the refinery’s co-chief executive, describes the demand surge as highly unusual.

“Typically, peak demand lasts for a couple of weeks. This has gone on for over three months,” he said.

With refineries overwhelmed, delays have rippled across the supply chain, slowing down deliveries and driving up costs.

The Liquidity Crisis in London’s Gold Market

London, the world’s biggest gold trading hub, has seen a shortage of physical gold as investors rush to send bullion to the US.

• Queues at the Bank of England (BoE) to withdraw gold stretched beyond four weeks.
• Gold lease rates soared, making it more expensive for jewellers and refineries to access physical metal.
• Supply bottlenecks worsened, as trained staff were unable to speed up the process of retrieving bars from underground vaults.

BoE Deputy Governor Dave Ramsden admitted that even he was caught in the delays, saying:

“Gold is a physical asset, so there are real logistical and security constraints.”

What’s Next for Gold Prices?

With Trump yet to confirm gold tariffs, traders took advantage of price gaps between London and New York. This arbitrage opportunity allowed those willing to transport gold across the Atlantic to cash in on the higher US prices.

Now, as fears of tariffs begin to ease, the gold rush is slowing down. Many expect that once the US stockpiles stabilise, traders will redirect shipments back to London, where storage is cheaper.

Will London and New York Ever Standardise Gold Bars?

The difference in gold bar sizes between the two cities has long frustrated traders. Attempts to introduce a standard size have failed in the past, but experts argue that this gold rush might finally push the industry to reform.

“I’d like to think that after this, we can all agree that London and New York should be looking at the shape and size of bars,” said Ruth Crowell, CEO of the London Bullion Market Association (LBMA).

However, market inertia and vested interests mean the current system is unlikely to change anytime soon. As John Reade from the World Gold Council points out:

“It creates financial opportunities for refiners, shippers, and traders who move kilo bars to New York.”

Conclusion: What Does This Mean for Investors?

The recent gold rush highlights the metal’s unique role in global finance—both as a financial asset and a physical commodity.

• If Trump enforces tariffs, gold prices could spike further as demand surges again.
• If fears subside, we may see a return of gold to London as investors seek cheaper storage options.
• Long-term reforms to standardise gold bar sizes could streamline global trading, though resistance remains.

For now, Switzerland’s gold refineries remain at full capacity, ensuring that wherever gold moves next, their furnaces will keep burning 24/7.

Sources: (FT.com, ChatGPT)