Gold Drops, Oil Rises as Early Election Results Show Tight Race, , on November 4, 2020 at 3:19 am

By ILP
On 11/04/2020
In Financial News
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(Bloomberg) — Gold fell with copper and oil pared gains as early U.S. election results shook traders’ faith in a decisive outcome.Spot gold fell 0.7% and the dollar strengthened as the race’s tightness spurred a flight to the safety of the greenback. Oil in New York rose 2.8%, paring an earlier advance of as much as 3.4%, with expectations OPEC+ will delay a planned easing of output cuts lending support.Market uncertainty may lead to heightened volatility over the next few hours as traders react to headlines and early clues of a possible Donald Trump or Joe Biden victory. Trump held a narrow lead in Florida, while other battleground states including North Carolina, Ohio, Georgia, Pennsylvania and Michigan were undecided.“USD strength is weighing on gold this morning, with a tighter-than-expected race for the White House proving supportive for the USD,” said Warren Patterson, head of commodities strategy at ING Bank NV. “There is little between Trump and Biden in Florida, and similarly for Ohio.”Click here for our real-time news updates and analysisThe stakes have never been higher in a presidential election as whoever wins will have the monumental task of leading the U.S. in its fight against a virus that’s claimed more than 230,000 lives in the country and decimated the economy. On a global level, the next president will also play an integral role in shaping domestic as well as international efforts against climate change, the use of fossil fuels and the pace of energy transition.During his presidency, Trump took a hard-line stance against major oil producers Iran and Venezuela by means of crippling sanctions, tightening global oil supplies. He also drove an escalation of trade tensions with China that prompted a rerouting of global commodity trade flows. And his support for American shale producers helped the nation’s output rise to a record, adding more supplies to the global pool.Click here for more U.S. election coverageA victory by Biden could pave the way for the roll-out of more fiscal stimulus that could lift equity and commodity markets –- particularly gold, which benefits from a weaker dollar due to money printing — in the near term. It could also lead to stricter regulation of shale drillers and also signal a detente with Iran, which would unleash millions of barrels a day in fresh crude exports. A Biden win would likely accelerate the transition away from fossil fuels in the U.S., which could boost long-term demand for metals like nickel and copper.A scenario in which neither candidate has a clear path to victory would be murkier for oil and other commodities, as investors would likely seek safe havens like gold while they waited for what could be a long battle over ballots. A marginal win by Biden in which Republicans retain control of the Senate may also unsettle investors, as they would be reminded of the divisions that have stalled promised fiscal stimulus in recent weeks.“No matter who wins, we’re not going to see an overnight change in policy,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “From that standpoint, it would take some time for the oil market to reflect on what those new policies would be and their impact.”Oil’s futures curve shows there’s still some concern about a potential glut even after signs the OPEC+ alliance will delay easing production cuts. Brent’s three-month timespread was $1.22 a barrel in contango, where prompt prices are cheaper than later-dated ones, compared with around $1 in mid-October.“The oil market seems to be on tenterhooks for this election’s results more than any other in the recent past,” said Vandana Hari, founder of Vanda Insights in Singapore. “Intraday volatility may reflect traders attempting to do the impossible: take a position based on their estimate of the final outcome.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.,

Gold Drops, Oil Rises as Early Election Results Show Tight Race(Bloomberg) — Gold fell with copper and oil pared gains as early U.S. election results shook traders’ faith in a decisive outcome.Spot gold fell 0.7% and the dollar strengthened as the race’s tightness spurred a flight to the safety of the greenback. Oil in New York rose 2.8%, paring an earlier advance of as much as 3.4%, with expectations OPEC+ will delay a planned easing of output cuts lending support.Market uncertainty may lead to heightened volatility over the next few hours as traders react to headlines and early clues of a possible Donald Trump or Joe Biden victory. Trump held a narrow lead in Florida, while other battleground states including North Carolina, Ohio, Georgia, Pennsylvania and Michigan were undecided.“USD strength is weighing on gold this morning, with a tighter-than-expected race for the White House proving supportive for the USD,” said Warren Patterson, head of commodities strategy at ING Bank NV. “There is little between Trump and Biden in Florida, and similarly for Ohio.”Click here for our real-time news updates and analysisThe stakes have never been higher in a presidential election as whoever wins will have the monumental task of leading the U.S. in its fight against a virus that’s claimed more than 230,000 lives in the country and decimated the economy. On a global level, the next president will also play an integral role in shaping domestic as well as international efforts against climate change, the use of fossil fuels and the pace of energy transition.During his presidency, Trump took a hard-line stance against major oil producers Iran and Venezuela by means of crippling sanctions, tightening global oil supplies. He also drove an escalation of trade tensions with China that prompted a rerouting of global commodity trade flows. And his support for American shale producers helped the nation’s output rise to a record, adding more supplies to the global pool.Click here for more U.S. election coverageA victory by Biden could pave the way for the roll-out of more fiscal stimulus that could lift equity and commodity markets –- particularly gold, which benefits from a weaker dollar due to money printing — in the near term. It could also lead to stricter regulation of shale drillers and also signal a detente with Iran, which would unleash millions of barrels a day in fresh crude exports. A Biden win would likely accelerate the transition away from fossil fuels in the U.S., which could boost long-term demand for metals like nickel and copper.A scenario in which neither candidate has a clear path to victory would be murkier for oil and other commodities, as investors would likely seek safe havens like gold while they waited for what could be a long battle over ballots. A marginal win by Biden in which Republicans retain control of the Senate may also unsettle investors, as they would be reminded of the divisions that have stalled promised fiscal stimulus in recent weeks.“No matter who wins, we’re not going to see an overnight change in policy,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “From that standpoint, it would take some time for the oil market to reflect on what those new policies would be and their impact.”Oil’s futures curve shows there’s still some concern about a potential glut even after signs the OPEC+ alliance will delay easing production cuts. Brent’s three-month timespread was $1.22 a barrel in contango, where prompt prices are cheaper than later-dated ones, compared with around $1 in mid-October.“The oil market seems to be on tenterhooks for this election’s results more than any other in the recent past,” said Vandana Hari, founder of Vanda Insights in Singapore. “Intraday volatility may reflect traders attempting to do the impossible: take a position based on their estimate of the final outcome.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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