- Gold surges most since 2008 as investors seek haven from storm
- Oil tumbles as much as 6.6%, copper slumps as dollar rallies
Commodities were swept up in a global market frenzy as investors sold assets linked to economic growth such as oil and copper and sought safety in precious metals after U.K. voters opted to leave the European Union.
Gold posted its biggest one-day gain since the global financial crisis of 2008 and silver jumped the most in 18 months after U.K. voters backed the “Leave” campaign by 52 percent to 48 percent in a referendum on EU membership.
Brent crude futures slumped as much as 6.6 percent and copper in London sank the most since Jan. 7 as the U.S. dollar surged. The Bloomberg Commodities Index of returns on 22 raw materials fell as much as 2.2 percent, the most since January.
“The flight to safety is very, very evident,” said Jeremy Wrathall, head of global natural resources in London at Investec Plc. “Copper is moving down, oil is moving down, it’s a reaction to the dollar. The only commodity that’s not behaving that way is gold.”
Wild swings in commodities echo wider turmoil in global financial markets following the referendum decision in the world’s fifth-largest economy. The British pound slid by the most on record against the dollar and reached its weakest level since 1985. Stocks tumbled in Asia and Europe, while haven assets such as U.S. Treasuries rose.
The Bloomberg Dollar Spot Index surged as much as 2.7 percent, adding to pressure on commodities denominated in the unit by making them more expensive for investors with other currencies. Brent crude fell 4.4 percent to $48.66 a barrel by 2:56 p.m. in London, after sinking the most since April 18. Copper on the London Metal Exchange slid 1.7 percent to $4,700 a metric ton.
A gauge of 18 industrial metal producers tracked by Bloomberg Intelligence fell as much as 8.7 percent and was down 7 percent at 10:03 a.m. in New York, led by BHP Billiton Ltd., Glencore Plc and Freeport-McMoRan Inc.
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Precious-metals prices were a lone bright spot. Spot gold jumped as much as 8.1 percent, the most since Sept. 17, 2008, days after Lehman Brothers Holdings Inc. filed for bankruptcy at the height of the global financial crisis. Gold producers were among the top gainers in the Bloomberg World Mining Index, and Newmont Mining Corp. was up 5 percent in New York, the top stock in the S&P 500 Index.
Spot silver gained as much as 6 percent, the most since Dec. 1, 2014. In a further sign of risk aversion, yields on U.S. 10-year Treasury notes slid.
“I have never seen volatility like this in my whole life,” Bob Takai, the Tokyo-based president of Sumitomo Corp. Global Research Co., said by phone. “It’s definitely a flight to quality assets. In these kinds of circumstances, gold, and also silver a little bit, are the typical places to hide investors’ money.”