Gold Seems To Find Floor Around $3,400 Level On Safe Haven Demand

(MENAFN- Khaleej Times)

Gold appears to be stabilising around the $3,400 per troy ounce mark, retreating slightly from recent peaks above $3,410. Market analysts suggest that the US government's decision to impose duties on one-kilo and 100-ounce gold bars is lending support to the metal's price.

Overnight, gold futures traded on New York's Comex exchange surged relative to the London spot rate, following a Financial Times report indicating that Washington would unexpectedly begin taxing imports of 1 kg and 100 oz bars. The move is seen as another setback for Switzerland, the global leader in gold refining.

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One-kilo bars are the standard unit for trading and storage within Comex-monitored vaults. Switzerland frequently serves as the intermediary between London's bullion market - where 400-ounce bars (roughly 12.44 kg) are the norm - and the smaller formats preferred in the US.

“The US futures market is a key liquidity source for bullion banks worldwide, offering round-the-clock hedging for physical gold transactions. That's why we're seeing the exchange-for-physical (EFP) spread widen dramatically again - short positions originally meant for hedging are unraveling. In the near term, short-covering is the primary catalyst, and once that subsides, the premium could normalise,” said Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Similar market distortions were observed during the Covid-19 crisis, when transatlantic gold shipments were briefly disrupted, and again earlier this year amid speculation that Trump's tariff policies might extend to precious metals.“It's worth monitoring whether another 'TACO moment' will materialise. If not, the spread may need to recalibrate to reflect the new tariff regime,” Hansen added.

In a broader context, these developments - echoing recent turbulence in the New York copper market - are prompting scrutiny of the Comex exchange's reliability as a venue for transparent price discovery. Analysts warn that the platform is increasingly susceptible to political interference, particularly from Trump's evolving trade strategies.

The December Comex contract (GCZ5), the most actively traded, hit a new all-time high of $3,534 overnight. The premium over London spot widened to more than $100, up from around $40 just a week ago.“All of this reinforces the London spot price as the most accurate reflection of gold's true value. Ignore technical breakouts in the futures market for now - the EFP distortions are skewing the picture. What matters is the spot price, which has been range-bound since April. A breakout above $3,450 would be needed to shift that,” Hansen noted.

Silver and platinum also found support earlier this month, buoyed by a spike in high-grade copper prices in New York, which hit a record $5.8955/lb on July 8. The rally followed Trump's unexpected proposal to double tariffs on copper imports to 50 per cent - far above market expectations. The announcement drove the premium over London Metal Exchange copper to a historic 34 per cent, triggering a rush to move copper into the US before the new rules took effect.

That trade quickly unraveled last week when Trump reversed course, declaring that refined copper traded on futures exchanges would be exempt from tariffs until at least January 2027.“The New York premium collapsed almost instantly, leaving traders with losses and US warehouses overflowing with copper - now at their highest inventory levels in 21 years. With imports drying up, domestic prices may fall below global benchmarks to clear the surplus,” Hansen said.

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