London The UK’s major bank HSBC lost around $ 200 million in the gold market in just one day in March, the amount the bank and other large gold market players typically earn in the segment throughout the year. Due to the losses quantified on Wednesday, there were dramatic price divergences between important gold trading centers.
The corona crisis had led to production interruptions at the gold refineries at the end of March and also severely restricted the transportation of precious metals. The result was distortions in the market. Price differences of typically a few dollars between futures trading in New York and the London cash market escalated to up to $ 70. There has not been such a large price spread in four decades.
HSBC already reported the existence of the gold market problem in March. The extent of the damage reported is new. It even exceeds the maximum losses that were possible according to the bank’s risk models – and by far.
The bank described the loss as “a loss in market value mainly related to difficulties in gold refining and transportation”. An unprecedented widening of the spread on physical gold has weighed on gold leasing and ingot financing business and has also put pressure on other gold hedging activities.
HSBC declined to comment on the Bloomberg information service. Last week, the difference between ounce prices in New York and London dropped to more normal levels below $ 5.
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