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PRECIOUS-Gold rally strongest since Brexit as Trump leads White House race

Published 2016-11-09, 02:22 a/m
© Reuters.  PRECIOUS-Gold rally strongest since Brexit as Trump leads White House race
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* Gold jumps nearly 5 pct to highest since Sept. 27

* U.S. dollar sinks, stocks drop as safe havens sought

* Mexican peso in freefall

* Trump wins key battleground U.S. states (Recasts, adds comment, updates prices)

By Sethuraman N R and Manolo Serapio Jr

BENGALURU/MANILA, Nov 9 (Reuters) - 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. 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. MKTS/GLOB

Spot gold XAU= 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 GCcv1 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 XAG= rose as far as $18.996 an ounce, its highest since Oct. 3, and was last up 2.2 percent at $18.74. Platinum XPT= rose 0.3 percent and palladium XPD= was off over 1 percent.

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