Swiss gold refiners are against moving refining operations to the United States, believing that the current export surpluses driven by tariffs are only temporary. The Swiss government is trying to persuade President Donald Trump to lower the 39% tariff on Swiss goods, as it has negatively affected businesses and the economy. Christoph Wild, president of the Swiss Association of Precious Metals Producers and Traders, warns against making hasty choices. The recent increases in gold exports to the US in late 2024 and early 2025 are seen as unusual. Traders have been shipping in advance due to possible tariffs.

The Role of Switzerland in Gold Refining

Switzerland plays a vital role in gold refining, which is essential to its trade. When exporting gold to the US, 400-ounce London bars must be changed into smaller 1-kilo or 100-ounce bars for the Comex exchange. Christoph Wild believes that expanding refining in the US offers limited benefits. The ongoing issue with US tariffs and Swiss refining capacity could lead to price fluctuations and trading opportunities in gold derivatives. If Swiss refiners do not set up facilities in the US, there might be a supply bottleneck for deliverable gold bars. This could cause the prices of futures contracts in New York to disconnect from gold’s spot price in London. Traders should keep a close eye on the difference between COMEX futures and the London spot price, as this gap widened significantly earlier this year. In the first quarter of 2025, CME Group data showed the spread, known as the Exchange for Physical (EFP), briefly went over $60. This mirrored the supply disruptions of 2020. Renewed tensions or logistical challenges could make it profitable to hold long futures positions against short spot positions.

Gold Volatility and Trade Strategies

The political nature of tariff discussions means gold volatility is likely to remain high in the coming weeks. The CBOE Gold Volatility Index (GVZ) has averaged around 17 this year, notably higher than the sub-14 average throughout much of 2023. This environment makes options strategies like straddles, which profit from significant price changes, especially relevant. Data from the Swiss Federal Customs Administration backs up refiners’ claims that the late 2024 export surge was temporary. After peaking at over 80 tonnes in December 2024, Swiss gold exports to the US dropped to an average of only 25 tonnes per month through summer 2025. This return to normal levels means that any new disruption could significantly affect the US market. For now, it’s crucial to stay alert, as the underlying issues in the supply chain persist. Traders should be prepared to respond to any updates regarding US-Swiss tariff negotiations, as the market may be underestimating the risk of a supply shortage. The physical conversion of 400-ounce bars continues to be a key point of vulnerability. Create your live VT Markets account and start trading now.

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