investors and analysts predicted further volatility for commodities from gold and oil to coal following donald trump <u+2019>s election victory . the effects could range from a boost to these u.s. dollar-denominated markets because of a weaker greenback to potential benefits for copper as a result of a possible rise in infrastructure spending. mr. trump<u+2019>s opposition to international trade deals, and what analysts said is a lack of clarity in his policies, could slow global economic growth and pull down commodities prices, some market participants said. <u+201c>uncertainty about who is going to be president has now been replaced with risk, and that will hit every asset class, including commodities,<u+201d> said neil williams, chief economist at herm<u+00e8>s investment management. crude-oil prices declined along with other markets as investors fled from risky assets in the immediate aftermath of mr. trump<u+2019>s victory in the u.s. presidential election, but tides turned as the stock market bounced back. u.s. crude ended up 29 cents, or 0.6%, at $45.27 a barrel, and brent, the global gauge, gained 32 cents, or 0.7%, to $46.36. j.p. morgan analysts predicted brent could be trading at $43 a barrel within a week of the trump victory. the picture for oil isn<u+2019>t straightforward. some analysts said a trump presidency will increase geopolitical tensions and noted the president-elect<u+2019>s hostility to iran, a major oil producer, which has just returned to global crude markets. new sanctions on iran could curb the enthusiasm of foreign companies looking to invest in iran<u+2019>s energy sector, according to analysts at rbc markets, and so hit supply. but mr. trump is also expected to dial down regulation of the u.s. fracking industry, while his hostility to global climate deals could be a positive for the fossil-fuel industry. a trump presidency is expected to help the u.s. coal industry with a potential reversal of environmental regulations that have seen closures of u.s. coal-power plants and stymied demand for the fuel. still, these measures could both increase demand for coal and its supply, meaning the effect on the commodity<u+2019>s price is unclear. mr. trump could also introduce subsidies for u.s. miners, said tom pugh, an analyst at capital economics. <u+201c>he<u+2019>s pledged to revive the coal industry, which implies support for failing mines, so you could get a big boost to the supply side, so the industry is a winner,<u+201d> he said. any impact on oil could be overwhelmed by developments at the organization of the petroleum exporting countries, the most important influence on market supply. meanwhile, gold has benefited the most from mr. trump<u+2019>s election run. gold futures in new york settled down 80 cents at $1,272.60 a troy ounce on wednesday, having initially surged as investors sought havens. analysts have begun to question whether the federal reserve will cut u.s. interest rates in december, as was expected. a postponement could be bullish for gold, which doesn<u+2019>t offer a yield and so becomes less competitive against assets that do. the u.s. election result pushed analysts to revise their predictions for gold. capital economics now expects the metal to climb to $1,400 an ounce by year-end, a $100 rise from its last prediction. the picture is more mixed for industrial metals. overall, investors said they believe the u.s. election results may hurt metals ranging from copper to tin, given that mr. trump<u+2019>s often -protectionist statements raise worries about a hit to global trade. this could also hurt global economic growth, to which metals such as copper and aluminum are especially sensitive. j.p. morgan chase & co. predicts that copper will decline to $4,760 a ton, down from $5,393.50 a ton early wednesday. <u+201c>his protectionism is clearly bad for the economy, and that hurts demand for commodities,<u+201d> mr. williams of herm<u+00e8>s said. still, others foresee a potential silver lining for copper. mr. trump<u+2019>s promise to increase infrastructure investment could be a bullish development for the metal, said ole hansen, head of commodity strategy at saxo bank. on wednesday, copper futures rose 3.4% to $2.4590 a pound on the comex division of the new york mercantile exchange, after mr. trump reiterated that promise in his first postelection speech. another potential plus for all commodities is any weakness in the dollar, which most resources are priced in, making them cheaper for those investors who hold other currencies. the shifting dollar helped move some agricultural commodities such as grains and coffee on wednesday. the wall street journal dollar index, which tracks the greenback against a basket of other currencies, initially slumped after mr. trump<u+2019>s victory before trading higher later in the day. write to georgi kantchev at georgi.kantchev@wsj.com and sarah mcfarlane at sarah.mcfarlane@wsj.com
volatility hits commodity prices - wsj
georgi kantchev