A sudden surge in demand for physical gold is reshaping the precious metals market as traders rush to secure bullion amid talk that President Trump may impose 25% tariffs. The buying spike has pushed gold to a record high of $2,853.20 and widened price gaps between major trading centers, with spreads reaching roughly $50 per ounce for gold and $0.90 for silver between London and New York.
The pressure has intensified over the past two weeks. Comex warehouse inventories climbed about 30% to roughly 30.4 million ounces as market participants moved metal into New York to hedge against potential tariffs. That reallocation has strained the traditional flow of bullion, leaving London’s market under noticeable pressure as physical metal shifts across the Atlantic.
Officials at the Bank of England say there is no outright shortage of gold, but they do acknowledge longer waiting times for vault transfers caused by the surge in activity. Industry analysts warn that the combination of rapidly rising physical demand and a market still dominated by paper trades—futures and other non-deliverable positions—could set the stage for a short-covering squeeze if supply cannot respond quickly.
Silver’s market looks especially vulnerable because a significant portion of its supply depends on imports from Mexico and Canada. Disruptions in trade flows, higher transport costs, or new tariff measures could magnify price volatility in silver, just as the scramble for physical metal has already driven sharp premiums in settlement markets.
Market participants point to several consequences of the current dislocation: higher premiums for immediate delivery, thinner liquidity in traditional hub markets, and longer lead times for physical transfers and refinements. Those dynamics can feed on themselves as buyers rush to secure metal, further tightening available inventories and widening geographic price differences.
Forecasts differ on the longer-term impact. Some analysts believe that if substantial tariffs are implemented, the reallocation of physical metal and the erosion of confidence in established settlement mechanics could push gold prices materially higher—some estimates noted by market commentators reach toward $3,500 an ounce under a worst-case scenario. Others caution that much will depend on how quickly producers, refiners, and vault operators can respond and whether central bank and institutional flows stabilize the market.
For now, investors and traders are watching inventory reports, warehouse movements, and spread changes closely. Short-term market functioning will likely depend on the speed of logistical responses and whether paper-market positioning is reduced through delivery or offsetting trades. The recent events underscore how physical demand can rapidly alter market dynamics and how sensitive precious metals prices are to disruptions in cross-border flows and trade policy uncertainty.