Major U.S. banks are resorting to extraordinary measures in the gold market, airlifting billions of dollars worth of gold from London to New York as economic uncertainty spurred by trade tariffs continues to impact global markets.
At a Glance
- U.S. trade tariffs have led to economic repercussions, causing banks to transport gold from London to New York
- Gold futures on New York’s Commodity Exchange have increased by 11% this year, closing at $2,909 a troy ounce
- JPMorgan plans to deliver $4 billion worth of gold to New York this month
- Central banks purchased over 1,000 tonne of gold for the third consecutive year
- The World Gold Council is working on a digital database to improve transparency in the gold market
Economic Uncertainty Drives Gold Market Shifts
The economic landscape has been significantly altered by trade tariffs introduced under the Trump administration, leading to unexpected ripple effects in the gold market. As economic uncertainty persists, major banks are taking unprecedented steps to mitigate potential financial losses. The price of gold has been steadily rising, with gold futures on New York’s Commodity Exchange increasing by 11% this year.
The disparity between gold prices in London and New York has created a unique situation. Physical gold in London has been trading about $20 lower than in New York since early December, a deviation from the normal synchronization of prices between these two major markets. This price gap has led to significant logistical challenges for banks and financial institutions.
Banks Take Action to Mitigate Losses
To avoid potential losses due to the price surge in U.S. gold futures compared to London, banks are taking drastic measures. They are physically shipping gold from London to New York to fulfill contracts. This operation is not without its challenges, as it involves securing the release of gold from vaults and modifying bars to adhere to Comex specifications.
“JPMorgan alone plans to deliver $4 billion of gold to New York this month,” the Wall Street Journal reported.
The logistics of this gold transfer are complex. Banks are using security firms to transport the gold in armored vans to London’s airports, from where it is flown to New York on commercial flights. This operation underscores the intricate connections between global financial and trade networks, and the lengths to which financial institutions will go to protect their interests.
Central Banks Increase Gold Reserves
The surge in gold prices is not just affecting commercial banks. Central banks around the world have been increasing their gold reserves, purchasing over 1,000 tonne of gold for the third consecutive year. This trend is particularly noticeable in emerging markets in Asia and Eastern Europe.
“Geopolitical and economic uncertainty remains high in 2025 and it seems as likely as ever that central banks will once again turn to gold as a stable strategic asset,” The World Gold Council (WGC) said.
Central banks are using gold as a hedge against inflation, currency instability, and geopolitical risks. Since the war in Ukraine, central banks have nearly doubled their annual gold purchases to reduce reliance on Western financial systems and the U.S. dollar. This shift in strategy has significant implications for the global financial landscape.
As the gold market continues to evolve, there are efforts to improve transparency and ethical sourcing. The World Gold Council is working on a digital database to track gold from its origin to the final product using blockchain technology. This initiative aims to curb illegal mining, which accounts for roughly 20% of global production.
“I think the biggest surprise on the demand side is the fact that central banks bought a thousand tons last year,” John Reade, Senior Market Strategist at the WGC said.
