CME Gold stocks reach record levels after recurrent inflows following price swings
CME daily data revealed that gold stocks in COMEX approved warehouses increased by 218,307 to reach a new record of 39,7 million ounces. This was due to residual inflows even after the major disruption had ended.
The Comex gold stock has risen 126% since late November when U.S. president Donald Trump announced that he would impose tariffs on Canada, Mexico and other countries.
Trump hasn't mentioned that he is targeting precious metals in his import tariffs. But market players are seeking deliveries to protect their Comex positions from such a scenario.
This activity increased the premium between U.S. Gold Futures and London Spot Prices and attracted those seeking to deliver to Comex stocks in order to benefit from price arbitrage.
Inflows of gold have been significantly reduced in recent weeks, with Comex gold stock now equaling 4-1/2 years' worth of U.S. gold consumption.
Adrian Ash, BullionVault's head of research, said that the gold story appears to be ending, at least temporarily. "Comex gold contracts are experiencing lower volume and open interest. The premium they charge over London gold quotes has also fallen, and is now consistently below $10 per ounce.
In recent weeks, gold lease rates in London have also decreased, signaling improved liquidity following the tightness of January due to massive deliveries in the U.S.
The lower rates of borrowing gold from London suggest that arbitrage has also done its work, moving more than enough gold across the Atlantic to dampen any potential price disruption caused by U.S. tariffs on gold.
(source: Reuters)
