Commodity prices fall after Donald Trump is elected US President By Reuters
By Naveen Thukral, Emily Chow and Nina Chestney
SINGAPORE/LONDON – Commodities ranging from oil and gas to metals and grains fell on Wednesday as the dollar strengthened and Donald Trump’s victory in the US presidential election raised concerns about taxes and economic growth.
Trump regained the White House by securing more than the 270 Electoral College votes needed to win the presidency, following a campaign of dark rhetoric that deepened divisions in the country.
Oil prices fell more than 1% due to pressure from the rally in the US dollar, which is set for its biggest one-day rise since March 2023 against major peers. [USD/]
Investors believe Trump’s leadership will strengthen the dollar as interest rates may need to remain high to combat inflation that could stem from new spending.
A strong US dollar makes greenback-denominated commodities such as oil more expensive for holders of other currencies.
Precious metals also fell, with gold sliding to an almost three-week low, while losing more than 2%, making it the worst performer in the base metals structure.
“Gold will be torn between the risk of inflation, which could slow the pace of deflation in the US, as prices are released and the continued demand for the safe-haven asset,” said Ole Hansen, head of commodity strategy at Saxo Bank.
Commodity prices began to fall overnight as traders began pricing in a likely Trump win.
“This situation is expected to bring the promised amount of imported goods, especially to China, which could cause a new wave of trade tensions and economic disruption,” added Hansen.
However, Trump could renew sanctions on Iran and Venezuela, removing barrels of oil from the market, which would be bullish, said UBS analyst Giovanni Staunovo. Iran exports 1.3 million barrels per day.
Benchmark European gas prices also fell by about 3% amid concerns about gas supplies and Trump’s stance on the Middle East conflict and the Russia-Ukraine war.
China’s iron and steel industries may face headwinds as Trump has promised to impose 60% tariffs on Chinese goods to boost US manufacturing.
“China’s steel prices will be under more pressure if Trump wins the election, and domestic steelmakers may face even greater losses,” said Ge Xin, deputy director at the Lange Steel Research Center.
“This is because Trump will be aggressive in terms of countermeasures against China.”
The copper market has been pricing in a rollback of US electrification programs, including subsidies for electric vehicles, which will reduce demand.
Agricultural commodities were also hit, with soybean futures in particular trading down. Wheat and corn have seen little in the way of renewed trade with China.
A strong dollar makes US grains more expensive overseas, and Trump’s proposed tariffs could disrupt US agricultural trade, where soybeans in particular rely on sales from top exporter China.
There are also fears that China could respond with retaliatory measures, which could reduce exports of key crops to the US and put downward pressure on prices.
Shares in European clean energy companies also fell as Trump vowed to scrap offshore wind projects through an executive order on his first day in office.
