KEY POINTS
- Trump’s victory triggers a sell-off in metals as the dollar strengthens.
- Oil prices stabilize after initial declines; U.S. energy sector remains robust.
- Agricultural commodities rebound amid concerns over potential trade tariffs with China.
Global commodity markets slipped as Donald Trump was elected the U.S. president; metals declined and oil and agricultural commodities found some footing.
Trump’s victory and the changes in American trade and energy policies have made stock markets more unpredictable, while global trade implications of those changes are yet to be seen by analysts.
Metals hit hard as dollar gains
Metals, particularly copper, gold, and zinc, took a hit as Trump’s win spurred a stronger dollar. Gold prices fell to a three-week low, driven by the strengthened dollar and market uncertainty surrounding Trump’s trade and economic policies.
Copper saw nearly a 4 percent decline, marking its steepest one-day drop in five months. Zinc also dropped significantly, with China’s steel industry likely to face challenges from Trump’s push to boost U.S. manufacturing and impose tariffs on imports.
Ole Hansen, head of commodity strategy at Saxo Bank, noted that gold remains torn between inflation risks and potential demand for safe-haven assets as economic tensions rise.
Analysts see the metals market continuing to price in the possible impacts of Trump’s policies, particularly those affecting China, a major metals consumer.
Oil prices stabilize amid mixed reactions
After an initial drop, oil prices steadied, with some analysts calling the early declines an overreaction.
Trump’s win stirred investor concerns over his potential tariffs on imports, which could impact U.S. economic growth and energy demand.
Despite Trump’s pro-oil stance, U.S. production had already reached record levels under the Biden administration, and analysts like Jacob Mandel from Aurora Energy Research believe the U.S. energy sector will continue to grow.
According to Mining.com, European gas prices also evened out after a brief increase, reflecting the mixed outlook for fossil fuel markets under a Trump administration. .
Analysts predict that while Trump’s policies may benefit U.S. oil producers, global energy markets could see increased volatility, especially as Trump’s trade strategies are implemented.
Agricultural commodities and trade concerns
There was an upward trend interrupted by declines in corn, wheat and soybean markets but rose as soy oil market advanced.
Trump once threatened to impose tariffs on the Chinese imports, which are a big purchaser of US soybeans. However, owing to the fact that the period of high demand for soybeans from the US is declining, there may not be significant effects next year due to the likelihood of trade barriers being implemented.
Analysts are also assessing the implications of Trump policies to the biofuel industry. New tariffs on imported used cooking oil for biofuels may force domestic consumers to purchase more American-made soy oil in demand.
The current president had pledged to delete funds planned under the Inflation Reduction Act, which backs green energy, Trump’s pledges to act may well hinder US foreign trade and production, particularly in areas like renewable energy and electric vehicles.
