Insights 
VT 
Gold spot prices remain stable despite a surge in COMEX futures, following surprise tariff implementations that are catching the market off guard. The tariffs are making gold more expensive in the US compared to overseas, resulting in a rare price discrepancy between COMEX and London Metal Exchange (LME) futures.
Gold transported to the US from London must first be refined in Switzerland to meet COMEX bar size specifications. This refining process is costly due to the tariffs, increasing US gold prices. Switzerland plays a crucial role, refining 90% of gold from industrial mines, adding to the complexity of the situation.
Uncertainty In The Market
Uncertainty looms in the market as the gold rush seen in January and February has not continued. Potential funding stress is possible, with companies like UBS warning of ramifications from the tariffs. The situation remains fluid, yet gold lease rates have not shown a major increase, currently at about -0.18%.
Gold prices hover around $3,392 while COMEX futures rise, as traders assess the situation. A key question is whether the US’s actions are intentional or a misstep. The Trump administration’s clarification could influence future prices, potentially revaluing US Treasury-held gold and affecting the supply chain. Demand may increase, potentially raising spot prices once the market adjusts.
As of today, August 8, 2025, the most important signal for us is the widening gap between COMEX and London gold prices. We are seeing COMEX futures for December delivery trading at a premium of over $75 to the London spot price, a spread not seen since the supply chain shocks of 2020. This indicates a significant structural issue for the US market caused by the surprise tariffs.
This situation creates a clear arbitrage play, but it also points to immense delivery risk. The tariffs make it much more expensive to land gold in the US, especially since most of it must first be recast in Switzerland. Data shows that open interest on COMEX has already jumped by 8% in the first week of August, suggesting traders are positioning for a squeeze.
Options In Managing Risk
Given the uncertainty over the Trump administration’s motives, options are a smart way to manage risk. Implied volatility on gold options has spiked, with the Cboe Gold Volatility Index (GVZ) climbing to its highest point since the market jitters back in March 2025. Buying call options or call spreads lets you participate in a potential price explosion while defining your maximum loss.
We saw a similar, though smaller, dislocation back in the spring of 2020 when the pandemic grounded flights and broke the physical supply chain. The COMEX premium surged then as traders scrambled for physical bars to deliver against futures contracts. This time, the disruption is political, which could mean it lasts much longer and has a more explosive outcome.
Despite the surge in futures, gold lease rates are staying low, with the one-month forward rate holding around -0.18%. This tells us that, for now, there isn’t a panic for physical gold in London, and large institutions still have access to supply. A sudden spike in these rates would be the final confirmation that a true physical shortage is hitting the market.
If this is a deliberate US strategy to revalue its Treasury reserves, the current spot price of around $3,392 is just a stepping stone. Such a move would aim to burn paper shorts who would be unable to source physical metal for delivery. A speculative long position in far-dated COMEX futures contracts could pay off tremendously if this view is correct.
