Massive withdrawal of gold bars! - Why is the second largest gold depository in the world facing this phenomenon?
President Donald Trump's tariff threats have created such strong demand for gold held in the United Kingdom that traders are facing potentially weeks-long queues for a chance to withdraw it.
All existing slots at the Bank of England for withdrawing gold bars have been booked as market players race to ship the metal to the United States to take advantage of rising gold prices there, analysts say. Gold has become more valuable in the U.S. than in other parts of the world as traders worry that supplies will fall if Trump's announced and planned blanket tariffs make imports of the metal more expensive.
"The U.S. gold market has been trading at a premium to the London market," Dave Ramsden, deputy governor for markets and banking at the central bank, told reporters on Thursday. Owners of bullion in his underground vaults have been "looking to take advantage of that price differential," he added.
As a result, the Bank of England, which has the world's second-largest gold stock, has seen strong demand for gold withdrawals, he noted.
The Bank of England, which is second only to the New York Federal Reserve as the leading global custodian of the precious metal, looks after more than 400,000 gold bars worth billions of pounds.
That pullback has been under pressure recently. Meanwhile, gold inventories on the US COMEX exchange, a major market for trading gold, silver and other metals, have almost doubled since the end of October, Commerzbank said in a note on Friday.
“The fact that gold is significantly more expensive on COMEX than in other trading centers is likely related to the looming U.S. import tariffs, which could also potentially affect gold,” wrote Carsten Fritsch, a commodities analyst at the German bank. “Therefore, shipments on COMEX are likely to be driven primarily by concerns about potential supply disruptions.”
The Bank of England's gold stock has fallen by around 2% since the end of last year.
Gold prices have risen in recent weeks thanks to the asset's safe-haven status, with investors spooked by Trump's tariff plans. Russia's protracted war in Ukraine and heightened geopolitical tensions in the Middle East are also supporting demand for the metal, according to UBS.
In addition to being a tangible and scarce asset, gold is different from other assets traded in other ways.
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