Gold’s Transatlantic Shuffle: Why London Vaults are Bulging Again

The London Bullion Market Association (LBMA) reported a 0.6% rise in London’s gold reserves to 8,536 metric tons by the end of April 遑, marking a significant reversal after months of outflows to New York. This shift, driven by the repatriation of bullion from U.S. markets, underscores how geopolitical policy shifts and market mechanics continue to reshape global gold flows.

The Tariff Effect and COMEX’s Role

The turnaround began in late April when the U.S. government excluded gold from broader import tariffs proposed earlier in 2025. This decision eliminated a key incentive for arbitrageurs to send gold to New York between December 2024 and March 2025, where record-high $80 billion in Comex gold stocks had accumulated to cover futures positions. With the premium of Comex futures over London spot prices narrowing, the arbitrage opportunity faded, triggering a reversal. By April, Comex stocks fell by 28.8 tons (worth $3.1 billion) in a single month, as bullion flowed back to London.

Central Banks and Commercial Vaults

The rise in London’s reserves was not uniform. While gold held at the Bank of England declined, commercial vaults saw robust inflows. The LBMA noted that bullion was “moving out of central bank storage and into the broader Loco London system,” reflecting improved liquidity. This bifurcation highlights a critical dynamic: central banks, including the Bank of England, lent gold to support derivatives markets, while commercial vaults absorbed returning bullion, easing systemic strain.

Silver’s Surprise Rebound

Silver also joined the rally, with London reserves rising 3.3% to 22,859 tons—the first monthly gain since October 2024. This contrasted with earlier declines tied to industrial demand volatility, suggesting broader market stabilization.

Why This Matters for Investors

The April rebound in London’s gold reserves signals a return to equilibrium after months of dislocation. Key drivers include:
1. Policy Clarity: The exclusion of gold from tariffs reduced uncertainty, allowing market participants to unwind hedging positions.
2. Liquidity Recovery: Lease rates fell to 0.2% by late March, down from January’s peak of 0.5%, easing borrowing costs and enabling smoother physical settlements.
3. Central Bank Buying: Institutions like China, Poland, and Turkey added 24 tons in February alone, reinforcing gold’s role as a geopolitical hedge.

The Road Ahead

Analysts see further upside. J.P. Morgan forecasts $3,000/oz by Q4 2025, citing gold’s “smile profile”—its ability to gain in both rising and falling U.S. rate environments. With central banks likely to continue diversifying reserves and geopolitical risks lingering, London’s vaults could see sustained inflows.

Conclusion

The April rise in London’s gold reserves is more than a statistical blip—it’s a sign of market resilience. By reversing earlier outflows, the transatlantic reshuffling reflects reduced tariff risks, improved liquidity, and enduring institutional demand. With central banks holding 8,536 tons and lease rates stabilized, London’s position as the global OTC gold hub remains unshaken. Investors should note this: as long as geopolitical tensions persist and central banks seek safe havens, gold’s upward trajectory will continue—a trend now cemented by the metal’s return to Europe’s financial heart.

Data Sources: London Bullion Market Association (LBMA), J.P. Morgan Research, World Gold Council.