Ahead of the US presidential election great hopes were pinned on the performance of the gold price should Donald Trump prevail. A few analysts saw a Trump victory sending gold to $1,500 or well beyond.
After a brief surge to $1338 an ounce on election night, gold’s nearly $180 an ounce collapse has unnerved the entire sector – even those companies enjoying the bounce in base metals that started way before Trump even became the Republican candidate.
Gold’s now barely hanging on to double digit gains for 2016 and the performance of the metal since Trump’s victory has dragged down precious metals. The exception is palladium thanks to its status as an industrial metal mainly used in automobile manufacture. Silver’s slide since the election has also been relatively contained – some 50% of silver finds application in industry.
While zinc – up 70% since the start of the year after adding another 12% in value since November 8 – would benefit from president elect Trump’s $500 billion infrastructure and fiscal stimulus plans, the change in sentiment towards industrial metals is nowhere clearer than in the copper price.
The bellwether metal’s 2016 performance had been lacklustre compared to zinc, tin (+46% year to date), nickel (+34%) and lead (+28%), but the metal started to move even before the vote and is now 25% to the better for the year.
The world’s second most traded bulk commodity after oil, iron ore (+16% since the election and 83% year to date) has defied expectations and while the price of the steelmaking raw material is influenced more by stimulus in top consumer China, Trump’s infrastructure push should provide some support.
US coal prices are off their lows reached in September and October, but despite avowed support from the Trump team the positive impact on the domestic industry from a new administration is seen as limited at best. Seaborne thermal coal prices have also come off the boil, down more than 22% since the election.
Oil’s resurgence is more an Opec than a Trump phenomenon, but the 13% jump over the past month retaking the $50 a barrel level is helping to bring price inflation across the mining and metals sector.