Markets taken aback by Trump tariffs as gold futures hit all-time highs

The recent imposition of a 39% tariff on imported gold bars by the US administration has caused significant disruptions in the global gold market. The move, announced in early August 2025, has led to immediate price volatility and a rerouting of trade flows.

The softer US dollar and anticipated Federal Reserve rate cuts have enhanced the precious metal's attractiveness as an inflation hedge. However, the tariffs have threatened to divert trade away from New York's Comex, the world's largest futures exchange, with London emerging as a possible beneficiary. The decision has landed a huge blow on Switzerland, the world's largest exporter of refined gold.

Initially, gold bullion prices spiked to record highs due to trader uncertainty but then fell more than 1% as markets awaited clarity on the administration’s stance. This volatility reflects the sensitivity of gold prices to trade policy uncertainty. The tariffs led to domestic gold prices rising above global spot prices roughly by the tariff percentage, while premiums for physical delivery increased substantially in the US market.

The tariffs prompted a rerouting of refined gold supplies away from the US towards Asia and Europe to avoid the imposed tariffs. This geographic diversion reflects mining companies’ and traders’ efforts to adapt through supply chain reconfiguration and flexible sales contracts.

Long-term impacts depend on whether tariffs stay in place or exemptions are granted. Given gold’s dual role as a commodity and monetary asset, exemption decisions consider strategic and financial system factors. Mining companies are also responding with geographic diversification, stockpiling, and hedging strategies to navigate ongoing policy uncertainty.

Meanwhile, oil prices recorded a sharp weekly loss on Friday amid the latest round of US tariffs and anticipated US-Russia talks on a Ukraine war ceasefire. The rise in gold prices is attributed to US tariff expectations and tariff-related hedging activity in futures. Strong central bank buying of 900 tonnes in 2025 and robust ETF inflows of 552 tonnes in the first quarter of 2025 reflect sustained demand for gold. Gold futures reached a record high on Friday.

Switzerland, already facing a 39% duty on other US imports, believes gold trade flows should be excluded from the current account balance. The price of gold surged to $3,534.10 an ounce in intraday trading, and settled at $3,398.58. The sudden ruling has "detonated decades of convention, setting the stage for a seismic redrawing of global gold flows."

The decision to impose duties on gold bars has created a dramatic pricing split, with London spot prices remaining steady and US futures jumping, commanding a premium of more than $100 an ounce. Central bank demand is expected to continue supporting gold prices in the second half of the year, with analysts predicting that gold will average $3,400 in the third quarter of 2025.

Global stock markets were mixed at the close on Friday, with Wall Street clinching a third winning week in a row after days of uncertain trade. Europe's major indices saw mixed results, with London's FTSE 100 nearly flat, Paris' CAC 40 adding 0.4%, and Frankfurt's DAX inching down 0.1%. Tokyo's Nikkei 225 closed 1.9% higher after a Japanese government official announced revisions to US tariffs on Japan.

In other news, Apple jumped 4.2% on Friday and recorded a 13.3% weekly gain after Mr Trump’s announcement of an additional $100 billion investment into US manufacturing. The Dow Jones Industrial Average, S&P 500, and tech-heavy Nasdaq Composite all posted gains for the day.

The recent imposition of a 39% tariff on imported gold bars by the US administration has caused geographic diversion in refined gold supplies, with Asia and Europe emerging as potential beneficiaries, as trade flows are rerouted to avoid the imposed tariffs.
The volatility in gold prices indicates their sensitivity to trade policy uncertainty, initially causing prices to spike to record highs due to trader uncertainty but then falling as markets awaited clarity on the administration's stance.
Amidst the latest round of US tariffs and anticipated US-Russia talks on a Ukraine war ceasefire, oil prices recorded a sharp weekly loss on Friday, while gold prices surged to record highs on Friday due to US tariff expectations and related hedging activity in futures.
Switzerland, faced with a 39% duty on other US imports, believes gold trade flows should be excluded from the current account balance, arguing that the sudden ruling has "detonated decades of convention, setting the stage for a seismic redrawing of global gold flows."
With domestic gold prices rising above global spot prices roughly by the tariff percentage and premiums for physical delivery increasing substantially in the US market, the tariffs threaten to divert trade away from New York's Comex, the world's largest futures exchange.
In other news, Apple experienced a 4.2% jump on Friday and posted a 13.3% weekly gain after Mr. Trump’s announcement of an additional $100 billion investment into US manufacturing, boosting Wall Street to a third winning week in a row.