Gold and Bullion Miners Tumble as French Vote Cuts Haven Demand

  • Investors favor risk as Macron expected to win French election
  • Traders’ focus may turn back to U.S. rates, Dahdah says

Future of France: Macron and Le Pen Go Head-to-Head

Gold futures fell to the lowest in almost two weeks and bullion mining stocks sank as investors favored riskier assets on expectations that Emmanuel Macron will become France’s next president. Copper and other industrial metals rose.

Gold slipped as much as 1.8 percent in New York and a Bloomberg Intelligence gauge gold miners plunged as much as 2.7 percent after pro-growth centrist Macron and nationalist Marine Le Pen won the first-round vote on Sunday. Le Pen, who wants to take France out of the euro and cut immigration, has trailed Macron in almost every opinion poll for the runoff. A second round takes place on May 7.

With the second-round line-up avoiding the scenario of a contest between Le Pen and communist-backed Jean-Luc Melenchon, widespread relief across markets pushed European stocks and the euro higher, and cut gold’s gain this year to almost 11 percent. Hedge funds had recently boosted bullish gold bets and investors bought bullion through exchange-traded funds amid demand for a haven amid concerns over North Korea.

Photo Essay: How Miners Dig for Gold Miles Underground

“Gold has benefited from geopolitical tensions this year and the market was pricing in a nasty surprise in France,” said Bernard Dahdah, an analyst at Natixis SA in London. “That has subsided with the fact that there won’t be two extreme candidates in the second round.”

Gold futures for June delivery declined 0.9 percent to settle at $1,277.50 an ounce at 1:38 p.m. on the Comex in New York, after touching $1,266, the lowest since April 11. Prices pared losses after data from the Chicago Federal Reserve showed U.S. economic activity fell in March.

QuickTake Gold’s Ups and Downs

Ric Spooner of CMC Markets discusses the outlook for markets in the wake of the French election first round.

Source: Bloomberg

With a Macron victory seen as the most likely outcome of the French election, investors will turn their attention to the outlook for U.S. interest rates, Dahdah said. While Federal Reserve officials are due to meet in the first week of May, traders mostly aren’t expecting a rate increase until at least June.

Gold’s slide also pulled down bullion mining stocks. The BI gauge of 15 large global bullion producers slumped 1.9 percent, paced by losses in Gold Fields Ltd. and Sibanye Gold Ltd.

In other metals:

  • Silver futures also fell on the Comex in New York, while copper futures rose
  • Platinum futures declined on the New York Mercantile Exchange, while palladium advanced.
  • On the London Metal Exchange, copper, aluminum, zinc and lead advanced, while nickel and tin fell

— With assistance by Luzi-Ann Javier

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