The United States has imposed tariffs on imports of one-kilogram gold bars, as reported by the Financial Times. In a letter dated 31 July, U.S. Customs and Border Protection stated that these gold bars should be classified under a customs code that subjects them to levies.<\/p>\n
This adjustment may impact Switzerland, known as the world’s leading gold refining hub. The decision could affect the movement and processing of gold within this important global centre.<\/p>\n
We are seeing the U.S. reclassify one-kilogram gold bars under a customs code that now includes tariffs, based on a letter from July 31. This news has already pushed gold futures higher this week, with the price moving towards $2,510 an ounce as the market digests the potential for supply restrictions. For us, this signals that the initial reaction is underway, but the larger price moves are likely still to come.<\/p>\n
The most immediate strategy is to position for higher volatility. The CBOE Gold Volatility Index (GVZ) has already spiked from a low of 16 to over 21 in the first week of August, showing that options markets are pricing in much larger price swings. We should consider buying options, like straddles, to profit from this expected turbulence without betting on a specific direction just yet.<\/p>\n
This development directly impacts Switzerland, which is the world\u2019s gold refining hub. In 2024, we saw Switzerland export over $60 billion worth of gold to the U.S., so this tariff disrupts a massive and critical supply chain. We can look back to the sudden government interventions of the past, like the U.S. abandoning the gold standard in 1971, to see how such actions can create sustained price instability and upward trends.<\/p>\n
A key trade for the coming weeks will be to watch the price gap between U.S. and international gold. The new tariff should make gold delivered in the U.S. more expensive than gold in London. We should explore spread trades, such as buying COMEX gold futures while selling London spot gold, to capitalize on this expected premium.<\/p>\n
We should also look beyond the commodity itself and at the currency markets. Gold refining is a critical component of the Swiss economy, and a major disruption to its biggest customer could weaken the Swiss Franc. A bearish stance on the CHF, possibly through USD\/CHF call options, presents a secondary way to trade the fallout from this policy change.<\/p>\n
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