GOLD is Donald Trump’s favourite metal. The taps on his private jet are 24-karat gold-plated. His $100 vodka is adorned with a golden “T”. He even hankers after the gold standard. He must have found it gratifying, therefore, that gold soared to its highest price since Brexit after his overnight victory in America’s presidential election. But copper and industrial metals also rallied. They tell a similar story: prepare for reflation.

Gold is both a haven and a hedge against inflation. Initially, its rally appeared to be a rush for safety. The dollar and stockmarkets plunged as Mr Trump headed closer to victory, pushing panic-driven flows into the yellow metal. It pared gains from a high above $1,330 an ounce to below $1,300 as other markets took heart when the president-elect, in his victory speech, promised to double American growth and rebuild the country’s infrastructure. But gold bugs remain bullish because Mr Trump is likely to expand the fiscal deficit, and the uncertainty over the implications of his election may make it harder for the Federal Reserve to raise interest rates. Fiscal expansion and continued monetary looseness are both potentially inflationary. “It has all just played into the hands of gold,” says Ole Hanson, head of commodity research at Saxo Bank. “We are stepping into the inflationary unknown.”

Industrial metals, especially copper, reflected a similar view. Copper briefly hit its highest level in 15 months today, at $5,443 a tonne, buoyed by hopes that Mr Trump’s promised building spree—he mentioned highways, bridges, tunnels, airports, schools and hospitals (no walls yet)—will lead to increased demand for a commodity that has flatlined all year because of overcapacity.

Oil, however, was largely unmoved. Unlike his foe, Hillary Clinton, Mr Trump is a vigorous advocate of fossil fuels. But what that means for oil, gas and coal prices is unclear because he talks about energy in generalities, and they suggest more supply as well as demand. He wants to end President Obama’s anti-coal campaign, but also believes in the merits of cheap natural gas. He supports hydraulic fracturing (one of his main energy advisers, Harold Hamm, is a fracking pioneer), yet also backs corn-based ethanol. And he thinks climate change is a hoax, which suggests ambivalence towards fuel-efficiency standards and other drags on oil consumption.

He has said that he wants to unwind the nuclear deal with Iran, which could hurt that country’s oil exports and efforts to woo foreign investors (only on Tuesday, Total of France became the first Western oil major to agree to re-enter Iran). But Mr Trump could also turn against Saudi Arabia, the second-largest source of America’s oil imports. So much is unclear that the market is choosing instead to remain focused on whether or not OPEC, the oil-producers’ cartel, can cut production later this month. But even that calculation may be affected by Mr Trump’s election. If Iran sees any risk that it will be shut out of the world’s oil markets again, it will surely want to pump as hard as it can before the Muslim-basher-in-chief takes office.


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