Gold: The little tariff that couldn't last

Tariffs remain a key driver of price movements in asset markets.

Many tariffs have been threatened, some have been imposed, and a few have been walked back. Gold, rarely targeted by tariffs, briefly found itself in the spotlight.

The wayward weekend

On Friday, August 8, US Customs issued guidance reclassifying one kilogram and 100-ounce Swiss-refined gold bars, the standard units for COMEX, as "semi-manufactured goods."¹ That decision subjected them to the 39% import tariff on Swiss products.² The larger 400-ounce bars used as the London Standard were classified as "unwrought," avoiding tariffs.³

The announcement sent New York futures to a record $3,534 per ounce and opened a gap of more than $120 per ounce against London spot prices.⁴ In practice, the market was discounting most of the tariff risk; had investors believed the levy would remain in place, the premium would be closer to $1,200.

The premium collapsed almost as quickly as it appeared. By Monday, August 11, the White House had clarified the position – “gold will not be tariffed" – and the market quickly re-aligned.⁵

Gold, a metal prized for its resistance to tarnish and corrosion, demonstrated in August that it is equally resistant to tariffs.

The structural price drivers

We believe more enduring forces continue to shape the gold market:

Central banks have emerged as the largest consistent buyers. Purchases exceeded 1,000 tonnes in each of the past three years, representing roughly a quarter of annual mine output.⁶ These flows are not a wholesale abandonment of the US dollar, but a gradual rebalancing. Much like the CFA Institute's Prudent Investor Rule, which emphasizes diversification and risk management, reserve managers are trimming dollar exposure at the margin, reflecting both geopolitical considerations and portfolio discipline.
Exchange-traded funds (ETFs) have also re-emerged as a source of demand. Inflows reached 226 tonnes in Q1 2025, the strongest quarter in three years, with cumulative inflows by mid-year totaling 443 tonnes (about $44 billion).⁷ Investors continue to treat ETFs as tactical vehicles, adding exposure when rate cuts appear likely and trimming positions during tightening cycles.
Speculative positioning contributed to volatility earlier in 2025. Hedge funds added exposure when tariff rhetoric seemed poised to slow growth and push rates lower, driving futures briefly above $3,500 before prices settled closer to $3,300.⁸

Final thoughts

The tariff episode was short-lived, but it underlined how impervious gold markets are to policy shocks. The longer-term picture remains anchored by central bank diversification, investor flows tied to monetary policy expectations, and episodic speculative trading. Gold has always straddled the line between commodity and monetary asset. In 2025, it reminded markets that while its price can be volatile, its role in the global financial system is remarkably difficult to disrupt.

Endnotes

¹ COMEX is an abbreviation for The Commodity Exchange. COMEX is the primary futures and options market for trading metals such as gold, silver, copper, and aluminum.
² "Gold Market is Shaken By Unexpected U.S. Tariff Ruling." The New York Times, August 2025. https://www.nytimes.com/2025/08/08/business/tariffs-gold-price-switzerland.html.
³ "Gold Hit By Surprise US Tariffs, Unleashing New Turmoil." Bloomberg, August 2025. https://www.bloomberg.com/news/articles/2025-08-08/us-hits-gold-bars-with-tariffs-in-blow-to-switzerland-ft-report?sref=wdbouC7s.
⁴ "3 reasons gold broke through another fresh record high." Business Insider, August 2025. https://www.businessinsider.com/gold-prices-record-high-tariffs-bullion-gold-bars-trump-russia-2025-8.
⁵ "Bullion markets breathe sigh of relief after Trump says gold will not face tariffs." Reuters, August 2025. https://www.reuters.com/business/bullion-markets-breathe-sigh-relief-after-trump-says-gold-will-not-face-tariffs-2025-08-11/.
⁶ "Gold demand hits new record in 2024." Gold Demand Trends: Full Year 2024. World Gold Council, February 2025. https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-full-year-2024.
⁷ "Global Gold ETF Inflows Hit $44B, Nearing 2020 Record." ETF.com, August 2025. https://www.etf.com/sections/features/global-gold-etf-inflows-hit-44b-nearing-2020-record.
⁸ Bloomberg: Gold price 12/31/2024–08/15/2025.

Important information

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