Gold dealers are offering Bank of England bullion at discounted prices amid concerns over potential tariffs and a rush to secure gold. The Bank of England vault usually sees gold prices in line with the broader market but is currently witnessing prices below market rates, with long queues forming for metal withdrawals.

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The unusual divergence in prices is a result of traders globally seeking to move gold to the US before potential tariffs are imposed. Although President Trump has not specifically targeted precious metals, dealers fear inclusion in blanket tariffs, prompting the rush to secure gold and silver.

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The Bank of England, holding over 400,000 gold bars, faces the challenge of meeting the high demand for gold, leading to delays and queues. This surge in demand has made commercial vaults in London more appealing than the BOE vault.

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Traders are loading planes with gold and silver bound for the US as prices on New York’s Comex outpaced international benchmarks. The demand for gold has tightened supply in London, causing lease rates for bullion to spike and creating a backwardation structure in the gold market.

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Central banks lending out their gold for returns have contributed to the market tightness, with the Bank of England being a key source of liquidity. The process of delivering gold to the Comex exchange involves re-refining bars in locations like Switzerland before shipment to the US, resulting in lucrative premiums.

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Delays at the Bank of England are not new, prompting some to reconsider storing gold at commercial vaults despite higher costs. The London Bullion Market Association is closely monitoring market dynamics influenced by US tariffs, emphasizing the need for clarity and coordination among market participants.

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Industry experts like Robert Gottlieb highlight the challenges faced by bullion banks seeking gold from central banks, causing bottlenecks and queues at the Bank of England. The gold market’s current dynamics underscore the impact of geopolitical uncertainties on the precious metal trade.

In conclusion, the turmoil in the gold market, driven by tariff fears and market dynamics, highlights the interconnectedness of global trade and the pivotal role of institutions like the Bank of England in times of market stress.