(Bloomberg) -- An eye-popping imports surge that has driven the US trade deficit to a record and elevated anxiety about the economy largely has its roots in a frantic scramble by international gold traders to rush bullion to New York depositories.
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The US imported a record $329.5 billion worth of all types of goods in January, $36 billion more than the prior month, Commerce Department data showed Thursday. Inbound shipments of finished metal shapes, a category that includes bars of precious metals, accounted for nearly 60% of the monthly increase in merchandise imports.
A deeper dive shows the customs value of gold and other precious metal bar imports totaled a whopping $30.8 billion in January after $10.7 billion was shipped to the US at the end of 2024. The average monthly value in 2022 and 2023 was $1.7 billion.
Typically, such a dramatic widening in the US trade gap would weigh heavily on gross domestic product. But because the jump in imports mainly reflects the impact of arbitrage in the gold market and most of the inbound metal will not be used in production, the government will exclude the influx as it calculates gross domestic product.
Concerns about the economic impact mounted last week after a preliminary advance report showed a massive widening of the merchandise trade deficit that prompted a sharp downgrade to the Federal Reserve Bank of Atlanta’s GDPNow forecast. Tepid consumer spending in January was also to blame.
“Most of the widening in the trade deficit since November reflects higher gold imports, which are excluded from GDP because they are generally not consumed or used in production,” Manuel Abecasis, economist at Goldman Sachs Group Inc., said in a recent note.
Because of the distortion to the trade figures from gold imports, “We think too much has been drawn from the latest data points,” Abecasis wrote last week. In a note Thursday, Goldman Sachs updated its tracking estimate for first-quarter GDP growth to 1.3% annualized. GDPNow currently shows a 2.4% annualized decline.
The concentrated nature of the larger trade shortfall also raises questions about the extent to which importers were racing to secure foreign-made goods ahead Trump administration tariffs.
The recent flood of gold imports into the US was largely in response to heightened concerns the precious metal could get caught up in sweeping US import duties. Also helped by safe-haven buying, gold futures in New York approached $3,000 an ounce in a rally well above international benchmarks.