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Singapore - Gold surged by the most since Britain’s Brexit vote as prospects for a Donald Trump presidency reverberated through global markets, with investors plowing funds back into haven assets as equities plunged.
Bullion jumped as much as 4.8% to $1 337.38 an ounce, the biggest intraday surge since June, and traded at $1 333.43 at 08:16 in Singapore, according to Bloomberg generic pricing. The advance put prices at the highest level since September and helped spur gains in the shares of gold miners.
Investors are fleeing risk assets as Trump won Florida, Ohio and North Carolina, states he needed for a path to the White House. Going into the vote, most polls showed Hillary Clinton ahead, forcing investors to scramble to adjust positions.
The real estate magnate is seen as a riskier bet than his rival after he advocated ripping up trade deals and building a wall along the Mexican border, and talked up Russia’s president.
“Rightly or wrongly, a Trump victory is seen by markets as a major risk event,” said Ric Spooner, chief market strategist at CMC Markets Asia Pacific Pty. “The size of the moves we’ve seen today in key markets does point to the possibility for further risk-off moves if a Trump victory is confirmed.”
Gold’s advance fueled a rally in related equities. Australia’s largest producer Newcrest Mining rose as much as 11% in Sydney, while Zijin Mining in Hong Kong climbed more than 7%.
Vote counts
The final results of the state by state fight for the presidency were still being tallied early Wednesday, but signs were pointing Trump’s way after he won Florida, Ohio, Iowa and North Carolina. Clinton pulled out a victory in Virginia and Colorado - two states critical to her chances - but Trump was competitive in another three other states she was counting on, New Hampshire, Wisconsin and Pennsylvania.
“We are glued to our screens and trying to make out which way it is going to be,” said Naeem Aslam, chief market analyst at Think Markets UK Ltd. in London. “For us, keeping a close eye on gold, yen and peso are the main indicators, and after every result we are looking at them.”
Bullion has gyrated in recent weeks as investors tracked the campaign, which has dominated sentiment even as the Federal Reserve signals that it’s set to raise interest rates. Odds of a US rate hike sank on Wednesday as the election results came in, bolstering the case for holding gold.
Hedge funds piled into bullion a week before Election Day amid bets that a Trump victory would trigger a repeat of last week’s sell-off that sent the S&P 500 Index of equities to its longest slump since 1980.
Gold futures may drop to $1 250 within a week should Clinton prevail, while a victory for Trump could buoy bullion to $1 395, according to more than 20 analysts and traders surveyed by Bloomberg. A gauge of price swings over the past 15 days has rebounded from a two-year low.
“Trump’s reactions to future events, if he were to become president, could be somewhat difficult to predict and could be more confrontational,” David Lennox, a resources analyst at Fat Prophets in Sydney, said by email. “Safe-haven gold would be the place to be. We would expect it to head back to the $1 340-$1 350 region on a Trump win.”
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