Gold and Copper Plunge as Trump’s Decisive Win Drives Up Dollar
(Bloomberg) -- Gold and copper plunged as Donald Trump reclaimed the White House, with a surging dollar pressuring commodities while traders weighed the ramifications of his views on trade, geopolitics and the US economy.
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Bullion fell the most since June and copper had the biggest drop since May as Trump’s win rippled through global markets and sent the greenback on course for its best day since 2020. A surge in the currency makes metals pricier for many buyers.
Trump clinched victory after taking key battleground states, while Republicans also gained control of the Senate. The definitive outcome prompted some traders to book profit after seeking safety in gold last month amid the possibility of a contested election. The precious metal in October had gained 4.2% or nearly $110, with money managers’ bullish bets near a four-year high.
The selloff in gold is “a combination of the fact that positioning is rather heavy, and stronger yields and the US dollar,” said Nicky Shiels, head of metals strategy at Geneva-based MKS PAMP SA. “The removal of some US political uncertainty given the decisive and quick win by Trump also ensures some geopolitical premium is unwound.”
Copper sank as much as 4.3% during a broad selloff on the London Metal Exchange, tracking steep losses in the Chinese yuan. Alongside the immediate impact of a weakening currency in the world’s top commodities consumer, traders are also bracing for a potential knock to demand if Trump follows through with pledges to deepen the US-China trade war.
A gauge of steel companies stocks jumped as much as 12%, the biggest intraday gain since March 2020 on anticipation that Trump will return to the White House favoring one of his top priorities during his first administration: tariffs on steel imports from across the globe.
Still, analysts see a bullish impact on gold in the long run, fueled by US inflationary pressures and currency weakness in China in the face of possible trade tariffs.
“While a stronger US dollar and higher yields in a Trump win may be headwinds for gold, this will be balanced with potential safe-haven demand in the event of any trade tensions,” said Jun Rong Yeap, a market strategist with IG Asia Pte.
Analysts have said Trump’s policies are likely to bloat the federal deficit — and the resulting inflationary risk could boost gold’s appeal as a hedge against rising prices.
The metal has surged almost 30% this year to repeated record highs fueled by heightened geopolitical and economic risks, driving purchases by central banks and consumers alike. The rally intensified in recent months as the Federal Reserve pivoted to interest-rate cuts and the US election loomed.