Who is grabbing gold bars? The center of global spot gold - London, is experiencing a shortage of gold bars!

Recently, as global gold prices surged again, London, as the center of global spot gold trading, has also experienced a rare shortage of gold bars.

According to the Financial Times, the waiting time to withdraw gold from the Bank of England's vault has extended from a few days to 4 to 8 weeks. An industry executive stated, "People cannot obtain gold because a large amount has been shipped to New York, and the rest is stuck in line. The liquidity in the London market has weakened."

Analysts believe that the demand for physical gold in London mainly comes from the United States and global central banks. Concerns over Trump's tariffs and gold arbitrage trading have jointly driven the demand for gold in the U.S.

On Friday, global spot gold rose above $2,800 per ounce, setting a new historical high.

U.S. Gold Inventory Soars

Since the U.S. presidential election in November 2023, gold traders and financial institutions have transferred 393 tons of gold to the gold vaults of the New York Mercantile Exchange (Comex). This has increased Comex's gold inventory level by nearly 75%, reaching 926 tons, the highest level since August 2022.

Market participants have also indicated that the total gold inflow into the U.S. could be much higher than the COMEX figures, as some gold may have flowed into private vaults of banks like HSBC and JP Morgan in New York.

Joe Cavatoni, a market strategist at the World Gold Council, stated, "Gold needs to enter New York, which is basically driving the 'hoarding' reason. This has led many to say 'we want to act early,' thereby pushing up the premiums in the futures market."

Two Main Reasons for Gold Flowing to the U.S.: Tariffs + Arbitrage

Currently, there are two main reasons driving the flow of spot gold from London to the U.S.:

1. Concerns over potential tariffs from the Trump administration: Although Trump has not explicitly stated that he will impose tariffs on gold, market participants are worried that new tariffs could be introduced on raw materials, including gold.

2. Price arbitrage opportunities: The gold price on the New York futures exchange is higher than that in the London spot market, and this rare arbitrage opportunity has stimulated traders to ship gold across the Atlantic. Traders need to obtain gold to fulfill certain futures contracts, allowing buyers to make physical deliveries of gold.

Last week, the June gold contract on Comex was priced up to $60 per ounce higher than London prices, but as traders transferred gold to New York, the price difference has fallen to $10 per ounce.

Currently, London is the main spot gold trading market globally, while the New York Comex is the primary futures gold trading market.

Central Banks are Also Major Buyers of Physical Gold

As mentioned in a previous article by Wall Street Insight, global central banks are currently also major buyers of physical gold, with one anonymous central bank purchasing 43 tons of gold in the London long-tail market In a research report released on January 19, Goldman Sachs analysts Lina Thomas and Daan Struyven found that recent off-market central bank gold demand unexpectedly increased, leading to an upward revision of their forecast for central bank purchases this year.

Goldman Sachs stated in the report that, according to the latest estimates, in November, central banks and institutions purchased 117 tons of gold in the London over-the-counter (OTC) market, far exceeding the previous expectation of 46 tons.

Specifically, the People's Bank of China remains the largest buyer, purchasing a total of 50 tons of gold in November, followed by an anonymous central bank that bought 43 tons of gold through Swiss channels.

Based on this, Goldman Sachs raised its forecast for the average monthly gold purchases by central banks in 2025 from 38 tons to 41 tons, more than double the 17 tons level before 2022.

However, despite the upward revision of central bank demand expectations, Goldman Sachs still maintains its forecast that gold prices will reach $3,000 per ounce in the second quarter of 2026, mainly because the bank expects the Federal Reserve's rate cuts this year to be more restrained, leading to a decline in gold ETF demand