Banking & Finance

US banks buy Dubai gold to counter potential tariffs

February 13, 2025, 3:53 PM

Gold is moulded into bars at a refiner in Switzerland. An orders backlog means US banks are widening their search for kilobars

US banks stocking up
Price nearing $3K per ounce
Swiss refining backlog

Dubai is among several global gold centres benefiting from fears among US banks that President Donald Trump might impose duties on the precious metal, analysts say.

A backlog at refining facilities in Switzerland has added to US banks’ concerns about the availability of bullion.

“There is now a real concern about the tariffs being imposed (on gold) and the market is worried about availability,” said Kirill Kirilenko, senior analyst of base metals at commodities research company CRU in London. “[Banks] are basically stocking up just in case this happens.”

This has contributed to the price of gold this week being only a few dollars short of $3,000 per ounce for the first time.

US banks tend to deal in kilobars of gold, though their main suppliers in London – the world’s largest gold-trading hub – store the physical form in 400-ounce bars. The bars then go to Switzerland for refining before being shipped across the Atlantic. There are 35 ounces in a kilo.

With a jump in demand for physical gold, the Swiss refineries are booked as much as two months ahead, Kirilenko said, prompting US banks to widen their search for kilobars.

Dubai, Singapore and Hong Kong have benefited as a result, according to a Singapore-based bullion dealer who spoke to Reuters on condition of anonymity.

“There is a shortage, not of gold, but of a certain form factor,” Kirilenko said. “Banks are hoovering up kilobars from every corner of the world and just shipping it over to the US.”

JP Morgan Chase & Co, Bank of America and Citigroup are amongst the biggest banks in the US involved in gold-bullion banking.

Arun Leslie John, chief market analyst at Century Financial, said the flight of gold from East to West could have a particular impact on stocks in India, the world’s biggest consumer of gold alongside China.

As a result, “a decreasing supply in India should benefit the gold exporters in the UAE”, he said.

The UAE central bank has also been adding to its gold reserves in response to concerns over international trade.

Gold hit a record $2,942.80 per ounce on Monday, but had retreated to $2,887.90 per ounce on Wednesday afternoon.

Citigroup forecast the price of gold could soon reach $3,000 per ounce.

Earlier this week, President Trump announced plans to impose 25 percent tariffs on all steel and aluminium imports into the US, prompting fears that gold could be a next target.

Analysts at Citigroup have previously said the price premium between the New York and London markets implied a roughly 20 percent chance that Trump will include gold in a 10 percent blanket tariff on all US imports.