Republican US presidential candidate Donald Trump has lit a fire under the global gold market.
Bullion rose for a sixth straight day as the tightening US presidential race spurred a jump in haven demand, with investors seeking out protection in their portfolios against the possibility of a victory for Trump even as the US Federal Reserve sent a signal that interest rates will soon rise.
“The insurance quality for gold has been there for quite some time,” said Wayne Gordon, executive director for commodities and foreign exchange at UBS Group AG’s wealth management unit.
“If Donald Trump is elected next week, we think gold can go anywhere shy of US$1,400,” Gordon told Bloomberg Television.
“If [Democratic US presidential candidate] Hillary Clinton is elected, we think gold can probably fall by US$20, US$30. So the clear skew in this trade is to the upside,” he said.
Investors are seeking to navigate the crosscurrents thrown up by the US poll that is due next week, with a possible victory for Trump buoying bullion prices amid concern that his presidency risks a global trade war and might hurt growth.
Gold’s advance has unfolded as the US central bank prepares the way for an interest rate rise next month, saying on Wednesday that it only needed “some” further evidence inflation and employment were on track toward its goals in order to hike.
Bullion for immediate delivery rose as much as 0.8 percent to US$1,306.87 per ounce and traded at US$1,301.82 at 3:56pm in Singapore, according to Bloomberg generic pricing.
Silver has benefited from investors’ Trump angst too. The metal seen as gold’s cheaper, more volatile cousin yesterday advanced for the ninth time in 10 days, with spot prices rising 0.1 percent at US$18.4938 per ounce.
Clinton has seen her odds of a victory falter after a probe into an unauthorized e-mail server was reopened.
Election uncertainty might drive precious metals higher as investors flee to havens, Jodie Gunzberg, global head of commodities and real assets at S&P Dow Jones Indices, said in a note.
A Trump win “would likely see a wave of risk aversion,” said Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd.
“Gold prices have already moved higher as a result of the US presidential election becoming less clear. Assuming polls continue to tighten, gold prices should continue to edge higher,” he said.
Asian stocks struggled again yesterday, with uncertainty over next week’s presidential election sending investors rushing for the sidelines.
Taipei closed down 0.79 percent, Hong Kong ended 0.6 percent down, Sydney closed 0.1 percent lower and Singapore gave up 0.2 percent in the afternoon.
There were also deep losses in Wellington and Manila, but Shanghai ended 0.8 percent higher and Seoul put on 0.3 percent. Tokyo was closed for a public holiday.
Additional reporting by AFP
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