Intermittent Spikes
WGC analysts say disruptions in bullion market seen easing in coming weeks
This story was originally published at 21:51 IST on 28 February 2025
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MUMBAI – The gold spot market has been well behaved and has benefited from the safe-haven flows amid increased financial market volatility driven by geoeconomic and geopolitical concerns. The disruptions in the bullion market will likely ease over the coming weeks, although the current environment of elevated geoeconomic risks could result in intermittent spikes, Juan Carlos Artigas, global head of research, World Gold Council and John Reade, senior market strategist, Europe and Asia, at the Council said in a note released on Thursday.
They said gold has not been a direct target of tariffs, but market reactions to trade uncertainty has driven a significant shift in trading behaviour and impacted gold prices. "The movement of gold from London to the US, rising COMEX premiums and concerns over availability were largely the result of risk management decisions rather than true supply issues," the WGC analysts said in the note.
The gold market has seen a significant rise in COMEX gold inventories, along with a widening of the spread between futures and spot prices, sparked by tariff uncertainty. Moreover, reports of falling inventories in London has fuelled speculation about stability in the gold market. The WGC analysts said events like these have happened before and the market has normalised thereafter.
Gold flowing into the US from around the world may limit the amount of gold going into other markets, including London, but the two WGC analysts believe that the impact should be temporary. This is especially true as gold has multiple sources of supply – mine production and recycling – spread around the world, reducing the reliance on imported gold to meet local demand in the medium term, they said.
WGC analysts said that signs of normality are starting to emerge – the buildup of COMEX inventories has slowed, the spread differential between gold futures and spot prices is falling, and the bid-ask spread for gold exchange-traded funds, many of which vault their gold in London – remain well behaved. End
US$1 = INR 87.50
Reported by Sandeep Sinha
Edited by Tanima Banerjee
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