Banks’ precious metals trading desks are on track for their best year in more than a decade following a frenzied rush from investors to buy gold amid the chaotic rollout of US tariffs, concerns over mounting government debt piles and the waning strength of the US dollar.

Precious metals trading revenues at the top 12 investment banks increased more than 60% year on year to more than US$1bn in the first half of 2025, according to data provider Coalition Greenwich, their biggest half-year haul since 2016.

Analysts say US tariffs have provided a strong tailwind for gold trading this year. Many investors frontloaded their gold purchases in the first few months of 2025 to avoid any levies that US president Donald Trump might impose on precious metals.

Investors ramped up their buying again once the tariffs were announced in April, with many looking to exploit arbitrage opportunities.

“The big factor driving bank gold revenues, and the biggest reason a lot of banks have done really well in gold trading across their commodities desks this year, is undoubtedly driven by US tariffs news,” said Angad Chhatwal, head of fixed income, currencies and commodities at Coalition Greenwich.

Gold prices have rocketed over 40% this year to hit a record of US$3,788 per troy ounce earlier this month. That is the fastest run-up in prices since 1979, according to Deutsche Bank, when the oil crisis triggered by the Iranian revolution and inflation fears led to a buying frenzy. That has made gold one of the best-performing investments this year, comfortably outstripping the near 13% rise in the S&P 500.

Gold’s reputation as the ultimate safe-haven asset has made it the main beneficiary of growing investor angst over tariffs, the path of inflation, government debt loads and the value of the US dollar. Many analysts are pencilling in further gains as more investors reach for an asset with a long track record of maintaining its purchasing power.

It also helps that there have been some very large buyers active in physical bullion markets. Central banks have accumulated more than 1,000 tonnes of gold in each of the last three years, up significantly from the average 400–500 tonnes over the preceding decade, according to analysis by the World Gold Council, as they have looked to diversify their reserve holdings. More than 30 of the 73 central banks the council surveyed said they expect to increase their gold reserves over the next 12 months.

“This is the most interest and enthusiasm for gold I’ve seen in my entire career,” said Michael Haigh, head of fixed income and commodities research at Societe Generale. “Gold is dominating all commodities’ conversations with clients, all of whom want to know what’s going to happen next.”

Trading arbitrage

The renewed focus on gold has produced profitable trading opportunities. Chief among these has been the glaring arbitrage between the price of gold in different trading centres created by US tariffs. At its peak, US tariffs pushed the price of gold 2%–3% higher in New York compared to London, said Matthew Hastings, global head of commodity trading at Standard Chartered. 

That created the promise of lucrative returns for traders able to physically transport cheaper gold from London to New York for delivery in contracts called exchange of futures for physical. According to BNP Paribas, those contracts hit record highs in August amid concerns of a potential disruption to future gold deliveries to the US.

“A number of factors have come together over the last few months to boost demand for gold,” said Alnawaz Jiwa, global head of commodities institutional sales and structuring and corporate metal sales at Citigroup. “The [client] flows have been meaningful and conviction has been increasingly high. The spectre of tariffs has also led to higher activity around exchange of futures for physical trading.”

The gold arbitrage has since disappeared after Trump issued an executive order in early September exempting gold from tariffs. Hastings said that while “the industry as a whole” was active in this space earlier in the year, EFP trading activity has reduced “significantly” since the executive order.

“We could potentially still see tariffs on silver, copper and other metals opening the door up to further EFP trading, but gold EFP trading is certainly less popular now than it was over the last month or two,” Hastings said.

Gold derivatives

Trading has also picked up in gold derivatives markets this year. The average daily notional traded for CME Group’s gold futures contracts is up about 36% to US$83bn, while gold options volumes have grown too, said Jin Hennig, CME’s global head of metals. CME is also seeing record high volumes in its smaller micro gold futures contracts – a sign of increased participation by retail investors, said Hennig.

“We’re in a period of heightened geopolitical uncertainty and macroeconomic risks. Market participants are turning to gold as a hedge,” Hennig said.

Many expect gold to remain in the spotlight in the months ahead. David Wilson, senior commodities desk strategist at BNP Paribas, said the uptake of gold exchange-traded funds has surged this year, with activity accelerating over the past few weeks.

“Gold definitely has further to run,” he said. “We’re in a new pricing paradigm where US$3,500 now looks like the floor to the price of gold rather than the peak. There’s no reason right now why the price would drop below that level and chatter is increasing about the possibility of gold hitting US$5,000 per ounce in the near future.”