Gold wobbled on Trump tariff confusion on Swiss Gold (39%)
·
Switzerland is the biggest refiner of Gold and the largest
supplier to the US, including the bullion market, contributing ~70% of the trade
surplus with the US
·
The market was expecting an exemption of such Trump
tariffs on Comex, SPDR, and ETF Gold, but caught in the wrong foot
·
Looking ahead, the White House will soon announce
rules for such tariffs on imported Gold into the US for the bullion market
Switzerland is the world’s largest gold refininghub, processing around 70% of global gold production annually, with five major
refineries, including Valcambi, handling the bulk of this output. It plays a
critical role in supplying refined gold, particularly one-kilogram and
100-ounce bars, to the U.S. market, including for exchange-traded funds (ETFs)
like the SPDR Gold Trust (GLD) and Invesco DB Precious Metals Fund (DBP). In
the 12 months ending June 2025, Switzerland exported $61.5 billion worth of
gold to the U.S., with $36 billion in Q1CY25 alone, representing two-thirds of
its trade surplus with the U.S.; this infuriated Trump, and he slapped a 39%
reciprocal tariff on Switzerland quite unexpectedly.
Switzerland
is the biggest Gold refining hub in the world and a supplier to the US bullion
market:
Swiss President Karin Keller-Sutter, who also
serves as the finance minister (Switzerland’s head of government is the Federal
Council, not a single prime minister), traveled to Washington, D.C., on August
5, 2025, in a last-minute effort to negotiate a reduction in the 39% tariffs
imposed by the Trump administration on Swiss exports, including gold bars,
effective August 7, 2025. The trip was hastily arranged without a formal
invitation from the White House, underscoring the urgency felt by Swiss
officials to address the tariffs threatening industries like watchmaking,
chocolates, and gold refining.
While Keller-Sutter aimed to meet with President
Donald Trump or senior U.S. officials, she returned to Switzerland without
securing a meeting with Trump in an embarrassment or achieving a deal to lower
the tariffs. CNBC interview with Trump further suggested that Keller-Sutter’s
earlier call with him was unproductive, with Trump remarking, “The woman was
nice, but she didn’t want to listen,” and emphasizing the U.S. trade deficit
with Switzerland.
The Swiss government confirmed the sudden trip was
intended to “facilitate meetings with U.S. authorities at short notice,” but no
specific agenda or confirmed meetings with Trump were disclosed. The delegation,
including Economy Minister Guy Parmelin, faced domestic criticism for the lack
of results, with some arguing that the move signaled Switzerland’s seriousness
in diplomacy despite its limited leverage. The absence of a formal meeting and
failure to secure tariff concessions highlight the challenges of Switzerland’s
neutral stance and limited bargaining power in the face of Trump’s
transactional trade policies.
As a neutral venue (nation), Switzerland was the
host nation for the last major U.S.-China trade meeting under Trump 2.0, which
took place in Geneva from May 9 to 12, 2025. The talks, held at the iconic 18th-century
Villa Saladin, were facilitated by Switzerland’s neutral diplomacy and involved
U.S. Treasury Secretary Bessent, U.S. Trade Representative (USTR) Greer, and
Chinese Vice Premier Lifeng. The meeting resulted in a 90-day tariff truce,
with the U.S. reducing tariffs on Chinese goods from 145% to 30% (including
Fentanyl tariffs of 20%) and China cutting duties on U.S. products from 125% to
10%. Switzerland’s role as a neutral mediator was pivotal in de-escalating the
trade war, with its Foreign Ministry and President Karin Keller-Sutter
coordinating logistics and creating a conducive environment for negotiations
between the two superpowers of the world.
The market
was expecting no reciprocal Trump tariffs on Swiss or any other Gold:
Fast forward, Trump’s 39% reciprocal tariffs, if
sustained on Swiss Gold, could affect translantic gold trade and also shift
demand toward smaller bars or coins, potentially increasing premiums for these
products. The US Comex needs physical Gold for not only underlying Gold ETFs,
but also to ensure any need for physical Gold to settle paper contracts in
Futures. Switzerland’s role as a refining hub remains pivotal, but the high
tariffs threaten its competitiveness, with some suggesting the refining
business could move to other hubs like Antwerp, which faces lower 15% EU
tariffs. The Swiss National Bank argues gold should be excluded from trade
deficit calculations, as refining generates minimal profit despite high trade
volumes, but the U.S. has not yet adjusted its stance.
As of August 8, 2025, there is evidence that the
Trump administration has already imposed tariffs on certain gold imports,
specifically targeting one-kilogram and 100-ounce gold bars, which have
significantly impacted the global bullion market, particularly affecting
Switzerland, a major gold refining hub. A Financial Times (FT) report on August
8, 2025, cited a July 31, 2025, letter from the U.S. Customs and Border
Protection agency stating that these gold bars are classified under a customs
code subject to a 39% tariff, contrary to earlier industry expectations of
exemptions. This move caused U.S. gold futures to surge to a record high of
$3,534.10 per ounce on August 8, 2025, reflecting market turmoil.
However, earlier in April 2025, nonmonetary gold
bullion was explicitly excluded from the broad "reciprocal tariffs"
imposed under the International Emergency Economic Powers Act (IEEPA), which
led to a reduction in the premium of Comex futures over London spot prices.
This exemption was reversed for the specified gold bars (one-kilogram and
100-ounce) by the July 31 ruling, indicating a shift in policy. The tariffs on
these gold bars are part of the broader "reciprocal" tariff regime
that went into effect on August 7, 2025, targeting over 60 countries with rates
ranging from 10% to 50%, with Switzerland facing a 39% rate.
There is no definitive information in the provided
sources indicating plans to impose additional tariffs on other forms of gold
beyond the one-kilogram and 100-ounce bars. However, the Trump administration’s
tariff policies have been described as erratic and subject to rapid changes,
with potential for further adjustments depending on trade negotiations or
retaliatory actions. For instance, a 90-day tariff truce with China is set to
expire on August 12, 2025, which could influence future tariff decisions if
negotiations falter. These tariffs on gold bars could be part of a broader
strategy BY the Trump administration to control gold markets or hedge against
economic instability. Given the Trump administration’s pattern of using tariffs
as a flexible tool, it’s possible that additional tariffs could be imposed on
other gold products if trade deficits or political objectives shift, but no
specific plans are confirmed as of now.
The London Bullion Market Association (LBMA) is
actively seeking clarification on the U.S. Customs and Border Protection (CBP)
ruling dated July 31, 2025, which unexpectedly subjected one-kilogram and
100-ounce gold bars to reciprocal tariffs, notably a 39% levy on imports from
Switzerland. This ruling contradicted earlier industry expectations, as
nonmonetary gold bullion under customs code 7108.12.10 was exempt from tariffs
in April 2025, but the CBP classified these specific bars under code
7108.13.5500, which is subject to tariffs. The decision caused significant
market disruption, with U.S. gold futures hitting a record high of $3,534.10
per ounce on August 8, 2025, and prompted some refineries, including a major
Swiss entity, to pause deliveries to the U.S. due to the uncertainty.
In
response, the White House has indicated it will issue an executive order shortly
to address what it calls "misinformation" about the tariffing of gold bars and other
specialty products. This forthcoming order aims to clarify that gold bars
should be exempt from these tariffs, aligning with prior industry assumptions.
The announcement led to a partial retreat in gold futures prices, which settled
at $3,454.10 per ounce after peaking, while spot prices stabilized around
$3,396.80. The Swiss Precious Metals Association and analysts have warned that
sustained tariffs could disrupt global bullion supply chains, particularly
affecting Switzerland, which exported $61.5 billion in gold to the U.S. in the
12 months to June 2025.
It remains unclear whether other gold bar types,
such as the 400-ounce bars traded in London, will be affected, as the CBP
ruling specifically targeted one-kilogram and 100-ounce bars. The White House’s
promised clarification is expected to resolve these ambiguities, but no
specific timeline has been provided, leaving markets in a state of flux. The
LBMA continues to liaise with members and authorities to ensure alignment with
previous U.S. statements on exemptions. The Trump administration suggested it
would issue a new policy clarifying that imports of gold bars should not face
tariffs, after the government stunned traders by ruling that they would be
subject to duties. The White House
is to clarify misinformation on gold tariffs shortly; a gold order is to be
posted shortly.
Switzerland
dominates global gold refining,
processing about 70% of the world’s gold,
but several other hubs are significant players in the industry.
Germany: Germany is a key European hub, with Heraeus
Precious Metals being a standout refinery. Headquartered in Hanau, Heraeus has
a gold refining capacity of 400–500 tonnes per annum and operates additional
facilities in Hong Kong and Newark, USA. Germany’s refineries, including four
LBMA-accredited ones, support its role as a major consumer of investment gold
and a supplier for industrial applications like electronics and aerospace. The
country’s robust scrap gold production further bolsters its refining industry.
India: India has emerged as a significant refining hub,
particularly through MMTC-PAMP, a joint venture in New Delhi between PAMP
(Switzerland) and MMTC, a state-owned trading company. Rajesh Exports, based in
Bangalore, also operates sophisticated refining facilities, with Valcambi
(Switzerland) under its ownership since 2015. India’s refining capacity is
driven by its massive domestic demand for gold jewelry and investment, making
it a critical player in Asia.
South
Africa: Rand Refinery, based in
Germiston, is Africa’s largest gold refinery, with a capacity of 600 tonnes per
year. It refines over 75% of Africa’s gold (excluding South Africa’s declining
output) and has processed nearly one-third of all gold mined globally since
1921. Its LBMA accreditation and role in supplying central banks and producing
Krugerrand coins underscore its global importance.
Japan: Tanaka Kikinzoku Kogyo, based in Tokyo, is a
leading refinery with a capacity of 500 tonnes annually. It dominates the
Japanese market and is known for high-purity gold bars and coins, including
distributing Royal Canadian Mint and Austrian Mint products. Tanaka’s 2015
acquisition of Metalor Technologies (Switzerland) expanded its global reach.
Japan’s focus on precision and compliance makes it a key hub in Asia.
North
America (USA and Canada): Asahi
Refining, with facilities in Salt Lake City, Utah, and Brantford, Ontario, is a
major North American hub, processing hundreds of tonnes annually after
acquiring Johnson Matthey’s assets in 2015. Its LBMA and COMEX accreditations
ensure it meets global standards, serving bullion banking, mining, and jewelry
sectors with sustainable practices like zero-waste water recycling.
China: China’s refining sector is growing, with Shenzhen
Yuexin Gold & Lead Co. among the notable players. The Shanghai Gold
Exchange (SGE) supports refining for domestic and international markets, driven
by China’s position as the world’s largest gold producer (380.2 tonnes in
2024). China’s strategic focus on refining aligns with its push for RMB
internationalization and gold reserve accumulation.
Australia: The Perth Mint operates a significant refinery,
processing gold from Australia’s substantial mining output (284 tonnes in
2024). It serves both investment and industrial markets, producing high-quality
bullion products with LBMA accreditation. Australia’s refining capacity
supports its role as a key supplier to global markets, including the U.S.
Dubai
(UAE): While not a major refining
hub, Dubai is a critical trading and secondary refining center, with the Dubai
Gold & Commodities Exchange (DGCX) facilitating regional gold flows. It
sources gold from Africa, Turkey, Switzerland, and Russia, often for re-refining,
and its strategic location enhances its role in the Middle East and North
Africa. Emerging refineries in Qatar and Saudi Arabia may further elevate the
region’s refining profile.
These hubs collectively handle a significant
portion of the world’s gold refining, with capacities ranging from hundreds to
thousands of tonnes annually. Their LBMA accreditations, technological
advancements, and compliance with responsible sourcing standards ensure they
meet global demand for investment-grade bullion and industrial gold. Emerging
hubs like Mali, with a planned 200-tonne refinery in Bamako, indicate a shift
toward localized refining in gold-producing regions.
Conclusions:
The Trump administration may soon clarify and
withdraw the reciprocal tariffs on Gold traded in Comex for price stability and
prevent potential translantic smuggling. Also, significant progress in the Ukraine
war ceasefire and the confirmation by Noble Peace Prize Aspirant Trump for an
in-person meeting with Putin on August 15 in Alaska along with overall
reduction in global geopolitical tensions, should be negative for Gold to some
extent. But Ukraine and the EU may not agree to ‘gift’ the entire Eastern
Ukraine to Russia/Putin as a part of the ceasefire despite Trump’s pressure.
Again, at the same time, increasing politicization of tariffs, the Fed, and BLS
may be positive. Overall technical chart suggesting a short-term range of 3405/3425-3455/3500
on the upper side and 3335/3275-3200/3090 on the downside, depending on
underlying news flow/developments.
Weekly
Technical outlook: DJ-30, NQ-100, SPX-500 and Gold
Looking
ahead, whatever may be the narrative, technically Dow Future (CMP: 44800) now has to sustain over 45000 for a
further rally towards 45300*/45800* and only sustaining above 45800, may
further rally to 46100/46500-47100/47200 in the coming days; otherwise
sustaining below 44950, DJ-30 may again fall to 44200/43900-43400/42400 and
41700/41200-40700/39900 in the coming days.
Similarly,
NQ-100 Future (23600) now has
to sustain over 23800-24000 for a further rally to 24100/24450-24700/25000 in
the coming days; otherwise, sustaining below 23750-22900, NQ-100 may again fall
to 22400/22200-21900/20900-20700/20200 and 19890/18300-17400/16400in the coming
days.
Looking
ahead, whatever may be the fundamental narrative, technically SPX-500 (CMP: 6400) now has to sustain over 6500 for a
further rally to 6600/7000-7500/8300 in the coming days; otherwise, sustaining
below 6450-6375/6300-6250/6200, SPX-500may again fall to 6000/5800-5600/5300 in
the coming days.
Technically
Gold (CMP: 3400) has to sustain over 3405-3425 for a
further rally to 3450/3475-3495/3505*, and even 3525/3555 in the coming days;
otherwise sustaining below 3400-3360, Gold may again fall to
3340/3320-3300*/3280 and 3255*/3225*-3200/3165* and further to
3130/3115*-3075/3015-2990/2975-2960*/2900* and 2800/2750 in the coming days.
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