I. Precious Metals
Gold
The price of gold turned slightly negative from the sharp gains made earlier on Wednesday, after a conciliatory victory speech from U.S. President-elect Donald Trump also helped the dollar rebound. Gold had surged by nearly 5 percent to a six-week high of $1,337.40 an ounce as it emerged that the Republican nominee had triumphed over Democrat Hillary Clinton in the presidential election, a surprise for markets which prompted investors to seek refuge in perceived safe-haven assets like gold. But gold's price later fell below $1,280 an ounce as the dollar turned higher, U.S. stocks rose sharply and U.S. Treasury debt yields touched multi-month highs. U.S. December gold futures settled down 0.1 percent at $1,273.50, with volume surging above 785,000 contracts, the highest for the most-active contract on records going back to 1980. It's too early to predict if Trump will enhance or hurt U.S. growth longer term; however, his policies should pressure U.S. real rates lower, while greater policy uncertainty is gold supportive. On the technical front, support can still be found around the 200-day moving average of $1,270 an ounce. We maintain our bearish view on gold. But its losses will be limited.

Silver
Spot silver was up 0.2 percent at $18.38 an ounce, having risen to its highest since Oct. 3 at $18.996 an ounce. It remained rangebound within the range between $18 to $18.50, diverging with gold compared with the latter’s downturn. Rising risk appetite provided a floor to silver. The trend, however, is unsustainable. Investors are recommended to short silver if the spread between gold and silver narrowed down.

II. Commodities
Crude Oil
Oil prices edged higher on Wednesday as stocks and the dollar bounced back from a huge early slide following Donald Trump's surprise victory in the U.S. presidential election. Crude oil prices tumbled as much as 4.0 percent to near $43 a barrel, a near two-month low, late Tuesday night as it became clear U.S. voters picked Trump as their next president. That selloff was part of a broad-based market reaction where investors late Tuesday night fled risky assets such as stocks and the dollar which have since recovered in value. Brent futures rose 32 cents, or 0.7 percent, to settle at $46.36 a barrel, while U.S. crude gained 29 cents, or 0.6 percent, to settle at $45.27 per barrel.

Copper
Copper surged to a 15-month high on Wednesday and pulled other metals up too on technical buying and as investors speculated that a Donald Trump presidency could herald a significant fiscal stimulus and boost demand for metals. In his victory speech, Trump said he would embark on a project to rebuild American infrastructure and would double U.S. economic growth. The Republicans have control of both houses of Congress and that means there is a possibility that those kind of programmes could become reality. Three-month copper on the London Metal Exchange rose as much as 3.5 percent to its highest since July 22, 2015 at $5,443 a tonne. It closed 3.4 percent higher at $5,411 in official rings, its biggest daily increase since March. Investors shall closely watch the risk of pullback due to profit-taking.

Soybean
U.S. soybean futures slumped around 2 percent on Wednesday, the first decline in five trading sessions, after the U.S. Department of Agriculture raised its domestic harvest estimates, traders said. The USDA estimated the soybean crop at 4.361 billion bushels, higher than analysts’ forecast of 4.314 million bushels. The government raised its soybean yield estimate to a record high of 52.5 bushels per acre, also higher than analysts’ estimate at 52.0 per acre. The benchmark January soybeans sank 20-1/4 cents to $9.91 a bushel. CBOT December soymeal fell $4.3 to $311.4 a tonne, while December soyoil slipped 1 cent to 34.31 cents. The trading volume of the CBOT soybean, soymeal and soyoil was expected at 264,311 lots, 141,669 lots and 198,135 lots respectively.

Dealing Room, ICBC Beijing Branch
Cheng Yu

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