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Deep beneath London’s Threadneedle Street lies a labyrinth of tunnels housing the world’s second-largest depository of gold. Within the heavily fortified vaults of the Bank of England (BoE), hundreds of tonnes of gold, valued at over £200 billion ($252 billion), are securely stored. However, this vast reserve is now steadily depleting as uncertainty grips the global financial market.
Trump’s Trade Tariffs Spark Market Unrest
The accelerating movement of gold out of London is being driven by concerns that President Donald Trump may escalate his trade war, potentially imposing tariffs on gold imports. Much of the bullion is now being shipped to New York City, where it is currently trading at a significantly higher price than in the U.K. capital.
According to reports by The Wall Street Journal, major financial players such as JPMorgan and HSBC are among the institutions spearheading the transatlantic transfer. The banks are moving gold across the Atlantic to offset losses on short positions, as uncertainty surrounding U.S.-E.U. trade relations intensifies.
Gold Prices Surge in New York
Trump has already announced sweeping 25% tariffs on steel and aluminum imports this week, heightening concerns that gold could be next. The U.K. central bank has been inundated with requests for gold withdrawals following a surge in futures prices in New York.
“We have seen an increase in demand as traders seek to capitalize on the price differential between London and New York,” Sir Dave Ramsden, Deputy Governor of the BoE, told The Telegraph.
Gold futures in New York have climbed 11% this year, closing at $2,935 per troy ounce on Thursday. Analysts predict prices may soon reach a record-breaking $3,000 per ounce, further fueling the exodus of gold from London’s vaults.
Billions in Gold on the Move
Over the past few months, an estimated 8,000 gold bars—equivalent to approximately 2% of the BoE’s total stock—have been transported to New York. The movement reflects a growing arbitrage opportunity, with some of the world’s largest financial institutions leveraging the price gap between the two financial hubs.
JPMorgan and HSBC, which hold substantial reserves in London, frequently lend bullion to borrowers who use it as collateral. These banks charge interest on such loans while simultaneously hedging against price declines by selling futures in New York.
According to filings from Comex, JPMorgan Chase alone is expected to deliver more than $4 billion in gold against futures contracts in New York this month. The trend has been particularly pronounced since Election Day in November, when Trump secured victory over then-Vice President Kamala Harris. Since then, U.S. gold inventories have doubled, further underscoring the shifting dynamics of the global bullion market.
Also Read: Gold Trades At Rs 80,400; Silver Remains Steady At Rs 97,000
