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Gold remains India’s favourite metal, especially during festivals when demand surges. However, this year, Indian buyers may have to pay more for gold and of course the reason lies in US President Donald Trump’s new tariffs on Swiss gold bars, which are an important link in the global gold supply chain. This move will disrupt trade flows & surge the prices, impacting Indian consumers worldwide.
Trump’s Tariffs Target Swiss Gold Bars
The US recently imposed tariffs on imports of one-kilo and 100-ounce gold bars from Switzerland. The Customs Border Protection agency ruled that these gold bars fall under a customs code subject to Trump’s levies. Christoph Wild, president of the Swiss Association of Manufacturers and Traders of Precious Metals, said the market believed remelted gold from Swiss refineries would remain tariff-free. Robert Gottlieb, a former precious metals trader, added that gold moving between central banks worldwide was never expected to face tariffs.
Broader Tariffs on Swiss Products
These gold tariffs are part of a wider 39 per cent levy on Swiss goods that started on August 7. Trump justified this by pointing to a $48-billion trade deficit with Switzerland. His tariff is much higher than the EU’s 15 per cent rate, making it the steepest among developed nations. Swiss luxury goods like watches, cosmetics, and chocolate will also face price hikes in the US. Efforts by Swiss President Karin Keller-Sutter to secure a trade deal with Washington failed earlier this week.
Impact on the Global Bullion Market
The global bullion trade relies heavily on Switzerland as a refining and recasting hub. Large gold bars move between London and New York through Swiss refineries. London prefers 400 troy ounce bars, while New York trades mostly in one-kilo bars. Since one-kilo bars dominate Switzerland’s bullion exports to the US, these tariffs affect a significant volume. Last year, $61.5 billion worth of gold traded between the US and Switzerland, which now faces $24 billion in extra tariffs.
Experts warn that the tariffs will disrupt settlements and funding markets. Brian Lan of Gold Silver Central called it a “dislocation” for big banks. UBS also warned about potential funding market disruptions and mass closeouts of exchange-for-physical positions.
Gold Prices Spike, Impact on Indian Buyers
Following the tariff announcement, gold futures in the US hit record highs, rising over 1.3 per cent to $3,499.30 per troy ounce. Gold prices in India jumped above Rs 1 lakh per 10 kilos, with 24-karat gold hitting Rs 1.02 lakh on August 8, causing the price difference between futures and spot gold to expand significantly. The spike is attributed by analysts to concerns about currency, inflation, and the allure of gold.
What It Means for India This Festive Season
These tariffs result in higher costs and less gold available for Indian consumers during the peak of wedding and festival seasons. Numerous jewelers have already faced decline in customer purchases. In order to avoid paying more for actual gold, investors are instead opting for safer alternatives like sovereign gold bonds and exchange-traded funds.
