Gold Soars on Arbitrage Trading. Forecast as of 08.08.2025
US import duties on gold have opened the door for arbitrage opportunities, with the gap between futures prices and the spot market now exceeding $100 per ounce. What does this mean for the XAUUSD pair? Let’s discuss this topic and make a trading plan.
The article covers the following subjects:
Major Takeaways
- The US has imposed tariffs on imports of 100-ounce and 1-kilogram bullion.
- Arbitrage trades are driving gold higher.
- US stagflation is the perfect environment for the XAUUSD pair.
- If gold breaks above $3,400, consider long trades.
Weekly Fundamental Forecast for Gold
Even before US Liberation Day, speculation about potential gold tariffs rattled the markets, prompting a shift of bullion from London to New York and causing the XAUUSD pair to surge past 3500. This proved to be just the beginning. In August, the US officially imposed tariffs on 1-kilogram and 100-ounce gold bars. The announcement sent futures prices to record highs, with the premium over spot gold exceeding $100 an ounce.
Futures and Spot Gold Premiums
Source: Bloomberg.
The widening price gap between US gold futures and the spot market is fueling arbitrage trades. Instead of closing futures positions with offsetting trades, some traders choose to take physical delivery of the lower-priced metal. This shift boosts exchange inventories while reducing the supply of precious metals available outside the exchange system.
China has seen a similar pattern in the past, when heavy arbitrage activity pushed gold inventories at the Shanghai Gold Exchange to record levels.
Gold Premiums and Shanghai Gold Reserves
Source: Bloomberg.
Unlike the derivatives market, the physical gold market reacted with relative calm to the new US tariffs, and the reasons remain unclear. Key questions are still unanswered: Will 400-ounce bullion bars, the standard in London trading, also face import duties? If not, could they be shipped to the US and recast into smaller bars for delivery against futures contracts? And are the tariffs a targeted response to Switzerland, a major transit hub for precious metals flowing from Asia and Africa to both Europe and the US?
Swiss President Karin Keller-Sutter’s trip to Washington to persuade Donald Trump to cancel the 38% tariffs may have only provoked the US administration. Trump has previously criticized former Canadian Prime Minister Justin Trudeau for what he saw as excessive deference. Is Switzerland now facing a similar scenario?
A bigger driver for gold right now is that the headwinds have finally turned into tailwinds. Signs of a cooling US labor market, combined with rising inflation expectations, are fueling concerns about stagflation, a scenario that historically favors gold. The Fed is expected to start cutting interest rates, and likely more than once. That would risk reigniting inflation while driving down real Treasury yields and weakening the US dollar. This combination may clear the path for XAUUSD bulls to push toward new record highs.
Thanks to arbitrage activity, the drawdown in above-ground stocks outside exchanges, and the looming threat of stagflation in the US, gold’s outlook is turning bullish for the first time in a long time. These factors may propel the precious metal beyond its medium-term consolidation range of $3,250–$3,400 and set the stage for a renewed uptrend.
Weekly Trading Plan for Gold
If the XAUUSD pair breaks through the resistance of 3,400, consider long trades with targets at 3,490 and 3,560.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
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