"Thanks to Trump..." Gold Prices Soar, but Only Some Profit

Gold Arbitrage Trading Booms Amid Tariff Concerns
Wall Street Firms Profit as U.S. Gold Prices Surge
Morgan Stanley and JPMorgan Lead Record-Breaking Trades

Gold prices in the United States surged amid concerns that gold could become subject to tariffs. In response, Wall Street financial firms such as JPMorgan and Morgan Stanley reportedly made significant profits by engaging in arbitrage trading.

According to Yonhap News on June 10, 12 financial institutions earned $500 million (approximately 680 billion won) from gold trading in the first quarter of this year.

(This photo is not directly related to the article.) Pixabay

This quarterly performance marks the highest in five years and is the second-largest amount in the past decade. It is about twice the average quarterly profit.

The profits from gold trading were driven by President Donald Trump's tariff policies, which stimulated domestic gold prices in the United States. Subsequently, concerns spread that gold could also be subject to tariffs.

Gold prices in the United States were higher than those in other major gold markets such as the United Kingdom, Switzerland, and Hong Kong. This created a situation where market participants could purchase gold abroad and bring it into the United States to secure substantial arbitrage profits.

Morgan Stanley actively took advantage of this opportunity. In the first quarter, the company imported 67 metric tons (mt) of gold into the United States to liquidate its own gold futures positions. At current market prices, this is worth about $7 billion.

JPMorgan, the largest bank in the United States, also delivered $4 billion worth of physical gold in February to settle futures contracts, which was a record amount for a single day’s delivery notice.

Donald Trump, President of the United States. EPA Yonhap News

However, this type of arbitrage trading ceased in April after gold was excluded from President Trump's reciprocal tariffs.

Meanwhile, due to the Trump administration's reciprocal tariffs, there were suggestions that the Group of Seven (G7), including Japan, might not issue a joint statement at this year's summit. If the G7 does not release a joint statement, it would be the first time since 2014.