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Trump tariff risk roils gold and silver as New York prices jump
By Jack Ryan, Sybilla Gross, and Yvonne Yue Li
Bloomberg News
Wednesday, December 11, 2024
Premiums for gold and silver futures in New York swelled as traders weighed the possibility of precious metals being included in sweeping tariff measures proposed by U.S. President-elect Donald Trump.
Gold futures for delivery in February traded as much as $60 an ounce, or 2%, over spot prices in early London trading, while silver futures were more than $1 an ounce, or 3%, higher.
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The price moves have been fueled by short covering by banks and funds who are buying Comex futures and selling contracts in London, said Nicky Shiels, head of metals strategy at MKS Pamp SA.
New York futures typically trade in lockstep with the London spot price, with many banks and traders arbitraging between the two markets via what is known as the "exchange for physical," or EFP.
"If some market participants believe that there is a non-zero probability of tariffs affecting gold, silver, and copper imports, then it makes sense to cover any short EFP positions," said John Reade, a strategist for the World Gold Council.
"It might cost a little money to do so, but the potential cost of not doing so is enormous," Reade said, pointing out that traders would risk losing nearly $300 per ounce of gold if 10% tariffs were enacted, far in excess of the potential profits to be made if precious metals are exempted from the measures. ...
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