London’s bullion market is under strain as banks scramble to borrow gold from central banks after a large transfer of metal to the United States.
Over the past two months, COMEX warehouse stocks have risen by 12.2 million ounces — roughly a 70% increase — a surge driven in part by concerns about potential US import tariffs.
Speculation about tariff measures from the Trump administration has triggered flows that drew the attention of the British Parliament’s Treasury Committee and materially reduced the available gold float in London. Although President Trump did not specifically name precious metals in public tariff discussions, market participants moved quickly to hedge futures positions and exploit price differences between London’s over-the-counter market and the US futures market.
The episode highlights how closely linked London’s global bullion hub is to developments in US markets. Traders often shift physical metal across jurisdictions to meet delivery obligations or to capture arbitrage opportunities when futures and spot prices diverge. When a sudden wave of demand pulls large quantities to COMEX warehouses, it tightens supply in London and can force financial institutions to turn to central banks for temporary lending of bullion to cover short positions.
Such dynamics can create temporary dislocations: premiums may appear in one market while discounts show up in another, and logistical frictions — shipping, insurance and compliance checks — can amplify the impact. Central banks have historically provided limited amounts of gold lending to facilitate market functioning, but a sustained or repeated drain of London’s inventory could raise concern about liquidity and market efficiency.
Market participants and regulators monitor these flows closely because they affect price formation and the ability of institutions to settle contracts. The recent transfer to US storage underscores the sensitivity of global bullion markets to political developments and illustrates how policy signals—real or anticipated—can prompt significant repositioning of physical metal.
In short, the recent sharp shift of gold to COMEX warehouses, prompted by tariff fears and speculative positioning, has tightened London’s usable supply and prompted temporary borrowing from central banks, underscoring the interconnected nature of global precious metals markets.