Gold tempers initial surge as Trump takes White House

[November 09, 2016]  By Jan Harvey

LONDON (Reuters) - Gold jumped nearly 5 percent on Wednesday as U.S. Republican nominee Donald Trump prevailed over Democrat Hillary Clinton in the race for the White House, prompting a dive in stocks and the dollar as investors bolted for safety.

Prices cut gains to just above $1,300 an ounce as wider markets stabilized after a conciliatory victory speech from Trump but remained 2 percent higher, leaving the metal on track for its biggest one-day rise since Britain's shock vote to leave the European Union in June. [MKTS/GLOB]

Spot gold vaulted to a six-week high of $1,337.40 an ounce, up nearly 5 percent, and was 2.1 percent higher at $1,302.75 by 0700 ET. U.S. December gold futures were up $28.90 an ounce at $1,303.40, having peaked at $1,338.30.

Davis Hall, head of forex and precious metals at Indosuez, said gold's retreat suggested upside for the precious metal was limited, but that gold could still benefit from a Trump victory as the longer-term implications emerged.

"I still think stocks are going to digest this over a 10-day period, and 10 days from now stocks will be lower than they are now," he said. "If the S&P breaks 2,000, gold will be up $100."

U.S. interest rate futures suggested traders saw a roughly even chance the Federal Reserve would raise interest rates at its Dec. 13-14 policy meeting, down from above 60 percent at Tuesday's close, Reuters data showed.

Speculation has mounted that Fed chair Janet Yellen may resign before the end of her term in January 2018, after Trump accused the U.S. central bank of keeping rates low to favor incumbent President Barack Obama, and indicated that he might replace Yellen.

Gold bullion is displayed at Hatton Garden Metals precious metal dealers in London, Britain July 21, 2015. REUTERS/Neil Hall/File Photo

"The dollar is already going down, based on the uncertainty of a Trump presidency," Amanda van Dyke, fund manager at Peterhouse Asset Management, said. "Gold is going to increase by 5-10 percent over the next few days ... the devaluation of the dollar will be correspondingly taken up by the gold price."

Governments from Asia to Europe reacted with stunned disbelief to Trump's victory in the U.S. presidential election, while populists hailed the result as a triumph of the people over a failed political establishment.

Spot silver <XAG=> was at $18.75 an ounce, up 2.2 percent, having risen to its highest since Oct. 3 at $18.996 an ounce. Platinum <XPT=> was 0.4 percent higher at $1,007 an ounce, while palladium <XPD=> was down 0.7 percent at $658.25.

(Additional reporting by Manolo Serapio Jr in Manila and Nallur Sethuraman, Apeksha Nair and Koustav Samanta in Bengaluru; Editing by Dale Hudson and Mark Potter)

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