UK faces gold shortage as London traders divert bullion to New York amid Trump’s tariffs

A number of media sources have reported the United Kingdom is being hit with a serious gold shortage, forcing London traders to direct bullion to the US to overcome the impact of Donald Trump’s new global trade tariffs.

An estimated $134 billion (US$82b) has reportedly been transferred from the Bank of England to New York, causing both shortages in the UK and blockages in the system.

US banker JPMorgan is among the financial powerhouses said to be moving some of its gold assets to New York, with the world’s biggest bullion dealer reportedly looking to transfer as much as 30 million troy ounces to the US.

Increased waiting times

Both the Financial Times and Reuters have reported that waiting times have soared for clients to retrieve their gold, with traders lining up for weeks to get bars out of the Bank of England and ship them to the US.

While the majority of gold trading is frictionless and involves the owner of a bar of gold changing hands on the holder’s systems, in some circumstances traders must deliver physical gold to fulfil certain futures contracts.

Analysts say gold inventories in New York are on a path similar to levels last seen at the outset of the COVID-19 pandemic.

Tonnes on the move

It is estimated that traders have moved 393 metric tonnes of gold into New York’s  Comex commodity exchange since Trump’s election victory in November.

The president imposed new tariffs on Mexico, Canada and China over the weekend, leaving the global market on tenterhooks to see what the impact will be.

One of the early effects has been a slide in gold prices after they hit record levels last week.

Impacted by a surge in the value of the US dollar after the confirmation of tariffs over the weekend, the gold price dropped to around US$2,795 early in Monday Asian trading.