The New York Times predicts a Republican-controlled Senate. It suggests a high likelihood of a Republican House of Representatives, too, which would give Trump complete control of Congress and the ability to advance his planned policies.
Gold prices were notably lower on Wednesday. (Source: TradingView)
In reaction to the news, commodities prices were largely lower during Wednesday morning trading amid a spike in the dollar's strength. The U.S. Dollar Index (DXY) rallied 1.67% to 105.15.
Silver prices traded more than 4% lower to about $31.40 an ounce and platinum prices also dropped $20 an ounce, or about 2%, to $980 an ounce.
Silver prices dropped more than gold following the U.S. election results on Wednesday. (Source: TradingView)
Of commonly traded metals, copper was hurt the most amid fears that Trump would introduce tariffs that could harm an already ailing Chinese economy with infrastructure plans that rely heavily on the use of copper. It was down more than 4.5% to $4.24 per pound Wednesday morning.
But is this a time to buy?
Blue Line Futures Chief Market Strategist Phillip Streible said more volatility should be expected in the short term as stop losses are hit in futures markets for gold and silver. However, he noted Wednesday’s significant drop could present a notable buying opportunity.
Streible said China had been waiting to see which candidate won the election to decide on how much more stimulus to inject into its economy. Given Trump’s rhetoric against China’s economy, which he has said is a direct threat to U.S. interests, China will likely begin planning more robust stimulus measures.
“Inflation should ruse on this type of agenda and you want to be long inflation, and when you go long inflation, you go long on many of these commodities which are coming back on sale,” Streible said. “Many of you were waiting for entry points on these things and I think we’re getting close to that.”
Looking to ‘digital gold’
Bitcoin’s price surged more than 7% to $74,400 due to the cryptocurrency-friendly candidate’s victory in the election. Etherium rose more than 8% to $2,635. The broader cryptocurrency market, which includes hundreds if not thousands of types of digital currency, was predominantly green across the board on Wednesday.
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