Gold pulled back from its biggest jump since Britain’s Brexit vote as turmoil across financial markets eased following Donald Trump’s surprise US presidential election victory.
Bullion earlier surged as much as 4.8% to $1,337.38 an ounce in London as investors sought haven assets, before paring gains as stock markets curbed losses.
A rally in gold mining shares, which earlier jumped as much as 12% in South Africa, also abated.
Analysts had said that a Trump victory could cause tumult across markets, which had been banking on a continuation of current policies.
His victory prompted traders to cut expectations that the Federal Reserve will raise interest rates in December.
A Trump presidency could send bullion to $1,395, according to more than 20 analysts and traders surveyed by Bloomberg before the vote.
“We saw prices rally sharply in Asian trading when the news started to filter through, but we seem to have come to terms with the idea fairly quickly,” said Adrien Biondi, the global head of precious metals at Commerzbank in Luxembourg. “Trump already seems to have moderated his tone, but I still expect prices to rise as we get clarity on his policies.”
Gold for immediate delivery gained 1.9% to $1,300.24 an ounce in London, according to Bloomberg generic pricing. It earlier touched the highest since September 27.
Before the vote, most polls showed Hillary Clinton ahead. Trump, who has never held public office, is seen as a riskier bet than his rival after he advocated ripping up trade deals and building a wall on the Mexican border.
“We have two trading floors, one in Geneva and one in Sydney, and phones are ringing non-stop,” Bernard Sin, head of precious metals trading at MKS (Switzerland) SA, said by phone from Geneva. “Everyone is buying.”
A gauge of South African gold mining stocks was up 8.6% in Johannesburg. Harmony Gold Mining Co led the gain, rising 9.5%. Randgold Resources Ltd climbed 7.2% in London.
Concern over Trump’s approach to free trade “is going to throw the global system into a bit of chaos,” which will support gold prices, said Mick Wilkes, chief executive officer of OceanaGold Corp, an Australian producer building an $380mn mine in South Carolina. “The only good thing about being a gold miner is that when when everything turns to mush, we do alright.”
Hedge funds piled into bullion a week before the election day amid bets that a Trump victory would trigger a repeat of last week’s sell-off that sent the S&P 500 Index of equities to its longest slump of daily declines since 1980.
Holdings in gold-backed exchange-traded funds are near a three-year high.