Gold prices jumped nearly 5 percent on Wednesday as US 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 dip below $1,300 an ounce as wider markets stabilised 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.
Spot gold vaulted to a six-week high of $1,337.40 an ounce, up nearly 5 percent, and was at $1,300.80 by 0930 GMT US gold futures for December delivery were up $26.90 an ounce at $1,301.40, 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."
The U.S. yield curve moved to its widest in six months, with investors now less certain that the Federal Reserve will raise US interest rates next month. Trump's fiscal policies are seen increasing the country's deficit, and so raising the cost of longer-term borrowing.
Speculation has mounted that Fed chair Janet Yellen may resign before the end of her term in January 2018, after Trump accused the US central bank of keeping rates low to favour incumbent President Barack Obama, and indicated that he might replace Yellen.
"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."
"Right now there's over an 80 percent consensus of a U.S. rate rise in December," she added. "That might change because of this."
Governments from Asia to Europe reacted with stunned disbelief to Trump's victory in the US presidential election, while populists hailed the result as a triumph of the people over a failed political establishment.
Spot silver was at $18.65 an ounce, up 1.6 percent, having risen to its highest since Oct. 3 at $18.996 an ounce. Platinum was 0.1 percent higher at $1,003.31 an ounce, while palladium was up 0.1 percent at $663.40.
Gold rally strongest since Brexit as Trump leads White House race
Gold jumped nearly 5 percent on Wednesday to its strongest in six weeks as investors sought safe havens after Republican Donald Trump moved to the brink of winning the White House, setting world markets on edge.
It marked gold's biggest single-day gain since June 24 when it rose as much as 8 percent when Britain decided to leave the European Union. It closed up 4.8 percent that day.
A Trump win, which many expect could lead to economic and global uncertainty, may also push the U.S. Federal Reserve to hold off from raising interest rates next month, further burnishing gold's draw, analysts say.
Trump edged closer to winning the White House with a series of shock wins in key states such as Florida and Ohio, opening a path to the White House for the political outsider and rattling world markets counting on a win by Democrat Hillary Clinton.
The U.S. dollar sank and stocks plummeted as investors faced the real possibility of a shock win by Trump. Sovereign bonds surged and the Mexican peso went into near freefall.
Spot gold rose as much as 4.9 percent to $1,337.40 an ounce, its strongest since Sept. 27, and was up 3.5 percent at $1,319 by 0704 GMT.
"A Trump presidency means a long period of uncertainty, in which every statement of the president-elect will have tremendous effect on the markets," said Joshua Rotbart, managing partner at Hong Kong-based bullion services provider J. Rotbart & Co.
U.S. gold for December delivery was last up 3.5 percent at $1,319.40 an ounce.
"The economic uncertainly this brings has seen a flight to safe haven assets and seen a significant sell off across Asian equity markets," said Cameron Alexander, an analyst with Thomson Reuters-owned metals consultancy GFMS.
Gold faced immediate technical resistance at $1,380, said Hareesh V, Research Head at Geofin Comtrade Ltd.
"Once it is close to these levels, we might see rallies in the next few days," he added.
U.S. rates futures imply traders see only a 36 percent chance of the Federal Reserve raising interest rates next month, based on Reuters data, which should support further gains in gold.
"The market turbulence that a Trump victory looks likely to bring will deter the Fed from hiking next month," said Craig Erlam, analyst at Oanda.
The Fed, which had shown a strong inclination to increase rates at its policy meeting next month before Tuesday's U.S. vote, may opt to wait for things to settle down first, said Vishnu Varathan, senior economist at Mizuho Bank.
Spot silver rose as far as $18.996 an ounce, its highest since Oct. 3, and was last up 2.2 percent at $18.74. Platinum rose 0.3 percent and palladium was off over 1 percent.