The United States has started charging tariffs on imports of one-kilogram gold bars, as reported by the Financial Times. In a letter dated July 31, U.S. Customs and Border Protection announced that these gold bars will now be classified under a customs code that includes tariffs. This change could have significant effects on Switzerland, which is the top global hub for gold refining. The decision may disrupt the movement and processing of gold in this essential market.

Impact On Gold Market Prices

The U.S. has reclassified one-kilogram gold bars under a customs code that imposes tariffs. This news has already caused gold futures to rise this week, with prices nearing $2,510 an ounce as the market reacts to potential supply restrictions. This suggests an initial shift is happening, but we may see larger price movements ahead. The best immediate strategy is to prepare for increased volatility. The CBOE Gold Volatility Index (GVZ) has jumped from a low of 16 to over 21 in early August, indicating that options markets expect bigger price fluctuations. We should consider buying options, like straddles, to benefit from anticipated market turbulence without committing to a specific direction just yet. This situation directly affects Switzerland, which plays a major role in gold refining. In 2024, Switzerland exported over $60 billion worth of gold to the U.S., making this tariff a major disruption for a key supply chain. We can learn from past events, like the U.S. abandoning the gold standard in 1971, which led to long-term price instability and rising trends.

Strategies For Trading The Tariff Fallout

In the coming weeks, an important trading focus will be the price difference between U.S. and international gold. The new tariff is likely to make U.S. gold more expensive than gold in London. To take advantage of this anticipated premium, we should consider spread trades, such as buying COMEX gold futures while selling London spot gold. We should also pay attention to the currency markets. Gold refining is vital for the Swiss economy, and a major disruption to its primary customer could weaken the Swiss Franc. Taking a bearish position on the CHF, perhaps using USD/CHF call options, could be another way to trade the effects of this policy change. Create your live VT Markets account and start trading now.

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