Gold prices lift on safety demand as Trump victory claimed

The yellow metal pushed sharply higher in early European trade, but the rise lagged its Brexit reaction.

The uncertainty could also extend to monetary policy and who will succeed Federal Reserve chairwoman Janet Yellen. Picture: The Australian/Renee Nowytarger.

Gold prices rose sharply in early European trade on safe haven demand, as Donald Trump claimed victory in his run for the White House.

Spot gold was up 2.2 per cent at $US1,302 per troy ounce, in early European deals.

The WSJ Dollar Index, which measures the US dollar against a basket of other currencies, was down 0.48 per cent. A weaker dollar is also bullish for gold.

“Gold’s jump shows the shock hitting financial markets worldwide,” said Adrian Ash, head of research at BullionVault.com.

The jump currently lags behind the increase in gold prices after the UK vote to leave the European Union, Mr Ash said. Gold rallied more than 6 per cent the day after the Brexit vote in late June.

“But a Trump victory today is only where the uncertainty and panic in other assets begins,” he said before Mr Trump claimed victory in New York City.

That includes implications for the timing of the next interest rate increase from the US Federal Reserve, which investors had widely predicted would come in December.

Several investors said Mr Trump’s win would likely delay that decision as officials adopt a wait-and-see stance, amid uncertainty about his economic positions.

That uncertainty could also extend to monetary policy and who will succeed Federal Reserve Chairwoman Janet Yellen, said James Butterfill, head of research and investment strategy at ETF Securities in London.

“[Mr Trump] has been critical of loose monetary policy and is likely to seek a new governor with a more hawkish outlook when Yellen’s tenure is complete,” Mr Butterfill said. “Investors are likely react negatively to this monetary policy uncertainty.”

The jump in gold was also dragging silver higher. The metal was up 1.63 per cent in early European trade, at $US18.66 per troy ounce, close to a one-month high touched before the market open.

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