A substantial amount of gold has accumulated in US exchange warehouses, driven by considerable influxes of bullion into the country amidst tariff-related activities. According to a recent report, inventories at the New York Comex bourse reached a historic 39.7 million ounces on Wednesday, marking the highest level in data extending back to 1992 (source). This stockpile, valued at approximately $115 billion, has more than doubled since early December as traders capitalized on a profitable arbitrage opportunity presented by a surge in US gold prices over international benchmarks.

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The remarkable premium between New York futures and the conventional London spot market was initially triggered by concerns surrounding potential inclusion of gold in the comprehensive tariff measures under the Trump administration. Consequently, traders were motivated to liquidate short positions on Comex, which elevated futures significantly above London spot prices, thereby driving gold into the US in substantial volumes.

The current gold stockpile now surpasses a previous record reached in February 2021, which was also characterized by a substantial inventory increase amid the pandemic-induced market turbulence. Presently, the market dislocation seems to be attenuating as the physical market tightens and premiums diminish. Daily gold inflows into depositories have diminished from peaks exceeding 1 million ounces in late January to approximately 200,000 ounces or less in recent days.

Traditionally, traders managing futures on the Comex would close their positions by cash settlements. However, delivering gold into Comex-registered warehouses remains an alternative for closing out positions. The gold held in these warehouses now equates to around 80% of the total open interest in Comex gold futures. This figure represents a significant increase from figures before 2020, when banks predominantly held gold in London and managed risks by selling futures in New York.

Source: IndexBox Market Intelligence Platform