The world’s financial giants are shifting vast amounts of gold from London to New York, seizing an opportunity created by a rare price discrepancy between the two financial hubs. The movement, led by banks like JPMorgan Chase and HSBC, follows speculation that former U.S. President Donald Trump could impose tariffs on European imports, including gold.
As a result, the price of gold has surged in the U.S., creating an arbitrage window that institutions are quick to exploit. The difference in gold prices between the London Metal Exchange and New York’s Comex futures market has made transatlantic shipments financially worthwhile despite logistical complexities.
Gold prices rise as tariff concerns disrupt markets
Gold prices in the United States have reached record highs, with futures surpassing $2,950 per ounce, according to Comex filings. The surge has been attributed to fears that gold imports from Europe could face tariffs under potential U.S. trade policies.
The price gap between London and New York has widened to around $20 per ounce, leading to a strategic shift in global gold flows.
According to Bloomberg, the U.S. gold supply has more than doubled since Election Day, reaching an estimated $106 billion. Meanwhile, London’s gold inventories have experienced a notable decline, as major financial institutions extract bullion from underground vaults to take advantage of the price differential.
The increased demand has created bottlenecks, with retrieval wait times extending from a few days to up to eight weeks.
Financial institutions capitalise on arbitrage opportunity
The shipment of gold is not solely driven by tariff fears—big banks are also leveraging an arbitrage opportunity. Gold stored in London is intrinsically identical to gold traded in New York, yet selling it in the U.S. currently fetches a higher price.
This has prompted institutions like JPMorgan and HSBC to move bullion in bulk, according to The Wall Street Journal.
Typically, these banks lend gold to borrowers as collateral, generating revenue through interest charges while hedging against price declines by selling futures contracts.
However, with the 45% increase in gold prices over the past year, traders who shorted gold have faced substantial losses. Rather than closing their positions at a loss, some institutions are opting to physically move gold to New York, where they can sell at a premium.
With financial institutions increasingly using commercial flights to transport bullion, the transatlantic gold trade has become a high-stakes endeavour. Experts suggest that if similar trends emerge in other metals markets, such as copper and aluminium, global commodity flows could face further disruptions.
