04 Nov Commodity prices fall as US election goes down to the wire
Commodity prices, including oil, gold and copper, have fallen after last night failed to produce a clear winner in the race for the US election, raising the prospect of a prolonged wait for the final result.
Spot gold dropped 0.9% as investors favoured the safety of the dollar, while West Texas Intermediate oil fell 0.5% in New York, wiping off gains of 3.4% it had made earlier. Silver also fell by 3% and copper dropped 1.9% on the London Metal Exchange.
President Donald Trump further alarmed investors after proclaiming he would petition the Supreme Court to stop ballot counting due to electoral fraud. Trump also claimed to have won despite votes still being counted in several key battleground states.
“The only thing we know for a fact is that the uncertainty will linger for a while after Trump’s premature announcement and Supreme Court threat,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Most assets classes are selling off while bonds and the dollar have rallied.”
Democratic presidential candidate Joe Biden has pledged higher fiscal stimulus if victorious, which would potentially boost equity and commodity markets, particularly gold – which benefits from a weaker dollar due to money printing – in the near term.
Meanwhile, a Trump victory would be good news for oil markets, according to FGE chairman Fereidun Fesharaki: “Under Trump, there’s a bigger chance of oil prices rising. The market has also began to realise that the selloff has been overdone.”