Global gold shipments distort US trade and GDP nowcast (again)

We're revisiting a peculiar distortion caused by international gold flows and, by extension, Donald Trump's unpredictable tariff rhetoric and execution. In March 2025, we examined GDPNow, a nowcasting model from the Atlanta Fed. The short version: Donald Trump's tariff threats triggered a sudden flow of gold from European vaults to the US in case they were subject to US levies. As GDPNow uses trade figures as a proxy for export strength, the sudden rush of gold imports pushed the nowcast to a sudden negative reading.

GDPNow has just seen another sudden revision -- this time, a positive one. After US trade figures for October were released on Jan. 8, the nowcast was revised to a 5%-plus rate of real-time economic growth -- a jump of two percentage points and a two-year high.

The trade figures showed that the US trade deficit unexpectedly narrowed to the smallest since 2009, reduced by a sharp pullback in imports. (This report was delayed by more than a month due to the government shutdown.) This import pullback was related to pharmaceuticals (also a sector where Trump's unpredictable tariff execution has led to monthly swings) -- but also "nonmonetary gold." Shrinking imports led to higher overall net exports, and hence a higher estimation of economic strength.

Our subsequent charts focus on the outsized role of gold specifically, highlighting its elevated share of both exports and imports during the Trump 2.0 era. We also do a national breakdown of US exports and imports to show the frequently prominent role of Switzerland -- known for its international banks, gold vaults and gold-refining sector. (The recent surge of gold exports to Switzerland, and to a lesser extent the UK, could reflect international investors' increased interest in gold's record-breaking rally.)

*The deduction of imports from headline GDP reflects an accounting measure to avoid double-counting consumption. It's worth noting that sharply higher imports during Q1 2025 (as our first chart shows) did not slash GDP growth rates as much as GDPNow was calling for. (Actual: -0.6% vs GDPNowcast: -2.7%).

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