US gold magnet: banks fly bullion from Asia-focused hubs to benefit from premium

Sherritt International

03/02/2025 17:33

By Rajendra Jadhav
       MUMBAI, Feb 3 (Reuters) - Global bullion banks are
flying gold into the United States from trading hubs catering to
Asian consumers, including Dubai and Hong Kong, to capitalize on
the unusually high premium that U.S. gold futures are enjoying
over spot prices.
    Traditionally, bullion banks transport gold eastward from
the West to meet demand from China and India, the world's two
largest consumers, accounting for almost half of global
consumption.
    But alarm about U.S. import tariffs planned by President
Donald Trump has driven Comex futures prices  GCcv1 
substantially above spot prices  XAU=  in recent months,
creating a lucrative arbitrage opportunity. 
    "Gold prices are skyrocketing, and in Asia, demand has
pretty much disappeared," said a Singapore-based bullion dealer
with a leading bullion supplying bank. Spot gold prices hit a
record high on Monday.  GOL/ 
    "Meanwhile, a sweet opportunity has popped up in the U.S.,
and naturally, almost every bank is jumping on it — moving gold
over for Comex delivery to cash in on the arbitrage," he said.
    COMEX gold inventories  GC-STX-COMEX  have shot up almost
80% since late November, or 13.8 million troy ounces worth more
than $38 billion at current prices, with supplies coming from
London, Switzerland and now Asia-focused hubs.
    The premium on Comex futures over spot prices widened again
to about $40 on Monday, compared with discounts as high as $15
in India and a discount of around $1 in China.
    The cost of moving gold from Asian hubs to the U.S. is
fractional when compared with prevailing Comex premiums, said a
Mumbai-based bullion dealer.
    A leading bullion bank even moved gold stored in a
customs-free zone in India to the U.S. last week, he said.
    In normal situations, many banks bring gold into India and
keep it in customs-free zones, clearing consignments by paying
import taxes only after realizing demand. They can move the
cargo back overseas without paying taxes.
    As retail demand in Asian markets was muted by high prices,
bullion banks were even sourcing gold from refiners in Dubai,
which usually serve as a major India-supplying hub, to cater
their demand in the U.S, said a Dubai-based bullion dealer.
    "The U.S. is like a gold magnet right now, pulling in gold
from all over the world," he said.

 (Reporting by Rajendra Jadhav;
Additional reporting by Polina Devitt and Ashitha Shivaprasad;
Editing by Veronica Brown and David Evans)
 ((rajendra.jadhav@thomsonreuters.com; Reuters Messaging:
x.com/Rajendra1857))