Gold market participants in London are scrambling to borrow bullion from central banks as deliveries to the United States increase amid concerns over potential tariffs. The Bank of England, which holds gold reserves for various central banks, now has a minimum four-week waiting period for withdrawals—up from just a few days.
Although U.S. President Donald Trump has not explicitly targeted precious metals in his trade policies, speculation has driven demand for gold in New York. This has resulted in a 70% increase in COMEX warehouse stocks over the past two months, reaching their highest levels since 2022. London, the world’s largest over-the-counter gold trading hub, has seen reduced liquidity as a consequence.
Industry experts highlight that the Bank of England, not being a commercial vault, is ill-equipped to handle the surge in borrowing requests. The British Parliament’s Treasury Committee has taken notice, with Bank of England Governor Andrew Bailey downplaying systemic risks, emphasizing that gold no longer underpins monetary policy. However, he acknowledged London’s continued dominance in gold trading.
As liquidity tightens in London, gold leasing activity has increased to compensate for the shortfall. The impact is also being felt in other major markets like Singapore and Hong Kong, with logistical challenges amplifying supply stresses worldwide.
