Commodities-Gold Zooms, Oil Swoons As Trump Lead Roils Risky Assets

Wednesday, November 9, 2016 6:55 AM

• Gold has biggest rally since Brexit, jumps nearly 5 pct.
• Brent crude drops to 3-month low; base metals also fall.
• Trump scores shock wins in battleground states.

By Manolo Serapio Jr

MANILA, Nov 9 (Reuters) – Gold surged nearly 5 percent in its biggest rally since June and oil fell to multi-month lows on Wednesday as Republican Donald Trump scored shock wins to head the race for the White House, leading investors to flee risky assets.

Base metals and grains also retreated along with equities and the U.S. dollar as investors anticipated global uncertainty if Trump takes the helm of the world’s biggest economy when many had been counting on a win by Democratic rival Hillary Clinton.

The selloff in risky assets was reminiscent of the market turmoil in June when Britain voted to exit the European Union which pushed gold up more than 8 percent at one stage as investors chased safe havens.

“This is deja vu of the Brexit moment, very worrying,” said Bob Takai, president at Sumitomo Corp Global Research in Tokyo.

Trump edged closer to winning the White House with a series of wins in battleground states such as Florida and Ohio, rattling world markets. Mexico’s peso plunged to its lowest-ever level.

Spot gold XAU= rose as much as 4.9 percent to $1,337.40 an ounce, its strongest since Sept. 27. By 0610 GMT, it was up 3.7 percent at $1,322.60.

A Trump win may push the U.S. Federal Reserve to hold off from raising interest rates next month, further burnishing gold’s appeal, analysts say.

“The market turbulence that a Trump victory looks likely to bring will deter the Fed from hiking next month,” said Craig Erlam, analyst at Oanda. GOL/ Brent crude oil LCOc1 fell as far as $44.40 a barrel, its lowest since Aug. 11, and was last down 2.2 percent at $45.02.

U.S. West Texas Intermediate crude CLc1 was down 2.5 percent at $43.84, after earlier hitting $43.07, its weakest since Sept. 20.

If Trump wins “the threat of growth forecasts being downgraded at least over the short-term due to investor uncertainty in theory weakens demand for commodities like oil,” said Jameel Ahmad, vice president of market research at trading platform and research firm FXTM. O/R Copper on the London Metal Exchange CMCU3 also fell, along with other base metals, but losses were more modest. Copper slipped 0.2 percent to $5,226 a tonne, not far below Tuesday’s one-year high of $5,250.50.

Wheat Wv1 , corn Cv1 and soybeans Sv1 each fell more than 1 percent.

In China, futures for steel and its raw materials bucked the decline in overseas markets, helped by a sustained rally in coal prices amid a shortage of the fuel. Iron ore DCIOcv1 and coking coal DJMcv1 climbed 6 percent and steel SRBcv1 jumped 5 percent.

http://www.kitco.com/news/2016-11-09/Commodities-Gold-Zooms-Oil-Swoons-As-Trump-Lead-Roils-Risky-Assets.html
(Reporting by Manolo Serapio Jr.; Editing by Richard Pullin)