By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
Gold hit a record $3,534 (~ ₹102,250) last week, driven by U.S. tariff confusion on Swiss gold bars, widening the London–New York spread to $100 before narrowing to $60. Despite uncertainty easing, market fragmentation risks remain. Fed rate-cut expectations and geopolitical developments may continue supporting prices.
Last week, gold surged about 3% and reached a record high of $3534 (~Rs 102,250), helped by news of tariffs on one-kilogram gold bars from Switzerland. The worldwide bullion market was significantly impacted by the decision to impose taxes on gold, which resulted in halted shipments.
Gold bars were previously thought to be exempt from President Donald Trump’s “reciprocal tariffs,” which include a 39% tariff on items imported from Switzerland, a significant gold exporter. The misunderstanding started when a Swiss gold refiner asked about the levies and was given a letter by U.S. officials explaining the situation. These tariffs will apply to both 100-ounce and one-kilogram gold bars, customs officials said. However, the Trump administration then announced that it intends to exempt gold bars from tariffs, even if a recent U.S. Customs and Border Protection judgment caused confusion. In an upcoming presidential order, the exemption status for gold imports will be clarified, addressing misunderstandings over specialist items and gold tariffs.
Since the price difference between London spot pricing and New York futures has exploded to almost $100 per ounce, compared to average spreads of about 30 cents on a $3,400 price, the ramifications go well beyond Switzerland. Now that the uncertainty has been resolved, the spread has shrunk to $60. After the tariff announcement, U.S. gold futures hit an all-time high of $3534, but spot prices stayed mostly restrained. The usually cohesive global gold market could become fragmented due to the classification ambiguity, which might force market participants to source non-Swiss bars at significant premiums while Swiss bars trade at discounts.
The Fed’s ongoing trade concerns and rising expectations of interest rate cuts later this year, however, may limit overall losses. Fed Governor Michelle Bowman said on Saturday that the latest weak jobs report confirms her concerns about the fragility of the labour market and supports her belief that three rate cuts are likely to be appropriate this year. Markets are increasingly betting on a Fed rate cut in September amid signs of a weakening labour market, with a potential follow-up move in December also priced in.
To prevent additional US sanctions on Moscow, US President Donald Trump said last Friday that he would meet with Russian President Vladimir Putin in Alaska on August 15 to discuss a settlement to the conflict in Ukraine. Investors were awaiting word on whether the US-China tariff truce’s August 12 deadline would be extended. For additional hints on the Fed’s policy stance, investors will be eagerly watching the publication of important US economic data later this week, such as retail sales, the PPI, and the CPI.
Economic Calendar for this week
Gold may continue its profit-booking up $3400(~Rs 100,400) and $3340(~Rs 98500) this week, as the positive trigger seems to be already discounted in the prices.
Gold Oct Futures Daily Chart
Silver prices might continue their profit-booking towards $37.7(~Rs 112,500) this week, taking cues from gold.
Silver Sep Futures Weekly Chart
Silver prices have given an upside breakout of their range above $37.5 (~Rs 110,000). This bullish momentum is expected to extend further towards $40 (~Rs 115,000) and $41 (~Rs 118,000).
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