Banks and Traders Capitalize on Bullion Trading Amid Gold’s Historic Rally
In an unprecedented turn of events, banks and traders are expanding their precious metals desks and logistics capabilities. This move comes as a response to gold’s historic rally this year, which has unexpectedly made bullion trading and vaulting one of the most profitable areas in finance. The once dormant world of bullion trading has sprung to life, with the industry’s key stakeholders racing to seize the opportunity.
Gold and Silver Prices Skyrocket Amid Geopolitical Tensions
The blistering rally in gold and silver prices in 2025 experienced another surge recently, fueled by rising geopolitical tensions between the US and Venezuela, as well as speculation over US interest rate cuts. The price of gold hit a record $4,500 a troy ounce for the first time on Wednesday morning, and the silver price crossed the $70 an ounce milestone this week, registering gains of 71 per cent and 150 per cent respectively for the year.
Impact on Precious Metals Trading Revenues
With this rally, revenues from leading banks’ precious metals trading desks soared 50 per cent during the first nine months of this year compared to the same period in 2024, as reported by data analytics company Crisil Coalition Greenwich. “There is a big pot to be made this year, and everyone is being quite aggressive on it,” stated Callum Minns, research manager at Crisil, highlighting that precious metals were becoming “a bigger proportion of the overall markets business” for top banks.
Precious metals trading revenues at 12 leading banks were about $1.4bn between January and September, setting 2025 on track to be the second-best year on record for gold trading, after 2020, as per Crisil’s data. Even banks that had previously closed their precious metals desks are now reentering the sector — with Société Générale, Morgan Stanley, and Mitsui all expanding their precious teams this year, according to industry insiders.
Increased Competition in the Market
The trend has also sparked intense competition from outside the banking sector, with non-banks rushing to increase their share of the burgeoning market. Swiss refinery MKS Pamp, financial platform StoneX, and London-based broker Marex have all reinforced their bullion trading operations this year.
Michael Skinner, head of metals at StoneX, views this as a “democratisation of the market,” arguing that the rising number of participants would ultimately benefit the market. With a significant physical gold trading business already in place, StoneX launched a Comex gold vault in New York this year and is expanding a UK bullion refinery it purchased last year.
The Resurgence of Vaulting Business
Once considered a mundane and low-margin business, vaulting is now back in fashion. Banks like Barclays and Scotiabank, which had sold their vaults in past years, are now revisiting the idea. “Most banks either are exploring or have explored vaulting,” said Minns from Crisil. “If you are on the vaulting list, you are getting additional revenue above everyone else. It is low returns but good traction.”
Citigroup is among those considering opening a vault, according to market insiders. However, the bank declined to comment on the matter.
The Strategy of Non-Banking Industry Players
James Emmett, CEO of MKS Pamp, which bought Scotiabank’s New York vault in 2021, noted that owning a vault allows for the operation of a custody business, providing a steady income stream. The company has made several significant hires this year, including bringing in Paul Voller, former head of precious metals at HSBC, as vice-chair. It also expanded its operations in Asia with a new regional headquarters in Hong Kong.
Emmett revealed more growth plans for next year, including the launch of gold options trading and expanding refinery operations in the US. “Our ambition is to be the leading precious metals house globally,” he stated. “We do everything but dig it out of the ground.”
While Wall Street banks have the advantage of large balance sheets, which have become crucial this year due to the unexpected surge in gold prices, their rivals outside the banking sector often have more expertise in sourcing physical bullion.
This year, Swiss trading houses Trafigura and Gunvor, traditionally specialists in energy and base metals, have launched physical bullion trading desks that handle “doré” — bars of gold mixed with other metals sourced from mines — and refined gold.
Despite the lucrative opportunities, not all have been able to tap into the gains. According to Minns at Crisil, banks’ gold trading revenues displayed “more dispersion” than usual this year. Even so, many gold veterans are welcoming the fact that bullion is now the center of attention.
“There were times during my career that metals just weren’t something that people talked about,” said Skinner of StoneX. “That is reversed now.”
Additional reporting by Emily Herbert
Source: Here
