LONDON: Gold futures hit a record high on Friday after reports of an unexpected US tariff on the precious metal.

Oil prices added to losses from the previous day on news of a meeting between US President Donald Trump and Russian leader Vladimir Putin, perhaps as early as next week, which raised hopes of a truce with Ukraine.

Gold futures reached a new intraday high at $3,534.10 an ounce after the Financial Times reported that Washington had classified one-kilo bars, the most traded type of bullion on Comex — the world’s biggest futures market — as subject to “reciprocal” tariff rates.

One-kilo bars make up the largest part of Switzerland’s gold shipments to the United States. Imports from Switzerland face a 39-per cent reciprocal tariff from Thursday. The FT said 100-ounce bars would also face the levy.

The levy caused “shock and confusion” in markets, said Han Tan, chief market analyst at Nemo.Money trading group.

The gold future price pulled back to $3 an ounce. Spot gold prices sat around $3,400 an ounce.

Saxo Bank’s analyst Ole Hansen said banks invest in gold futures to protect themselves from price swings in the physical bullion market.

As tariffs threaten to raise prices for physical gold, these “short positions originally intended as hedges suddenly blow up”, prompting banks to buy back futures and driving prices higher.

Published in Dawn, August 9th, 2025