Copper On November 7th, copper was trading at US$2.30/lb. In the two days after Donald Trump’s election on November 8th, the red metal surged to US$2.67/lb. – a remarkable shift, on the back of Trump’s promise to spend US$500 billion when he takes office next year, and as much as US$1 trillion over ten years to rebuild roads, bridges, airports, hospitals and schools. Over the latest week, copper price has retraced its surge and fallen back to a more modest US$2.45/lb or just 7% higher than the pre-election price. In a research note, Capital Economics cautions that despite encouraging signs of falling warehouse stocks and the effect of recent mine production outages, the current upturn in the copper price is vulnerable to a correction in investor sentiment or profit-taking. China represents 47.8% of global copper demand, while the US represents a meagre 8.1%. China is the world's locomotive, and copper is its partner in development. The latest leg up for the red metal began in mid-October with renewed confidence that China’s economy, responsible for nearly half the world's copper demand, had returned to more robust growth. The additional, but short-lived, 30c/lb. surge followed the Trump election. BMI Research gives several reasons for its highly skeptical view of Trump’s infrastructure plan and its potential to lead to a surge in demand for copper. They include the likelihood of an 'America First' metals procurement policy under the program, but the number one reason is simple math. At 8.1% of global demand, the US is just not a big enough copper consumer to move global markets and prices. According to a new Focus Economics survey of 22 investment banks and other commodity research institutions, analysts and investors continue to question the sustainability of the rally. BMI Research expects copper prices to break out of a narrow trading range by 2017, supported by additional Chinese fiscal stimulus in the form of support for public-sector construction and the acceleration of public-private partnership infrastructure projects. BMI forecasts copper prices to average only slightly higher at US$2.23/lb in 2017, compared to US$2.15/lb so far this year. Gold Widespread pre-election expectations were that Donald Trump's shock victory in the US presidential election would trigger a major sell-off of risk assets and a corresponding surge in the gold price, with analysts even predicting it could rise to well above US$1,500/oz. In addition to Trump's fairly lightweight and conciliatory post-election speech, there is a sense that the markets are recalibrating the impact of his presidency, especially the pledged big infrastructure spending programme. Gold, after a brief rise to US$1,337/oz., stabilized. In the second full-trading session after the vote, the price fell below its pre-election low of US$1,280/oz. Gold continued its plunge to a five-month low at the end of New York trading last Thursday, dropping to US$1,216/oz. It fell again in London the following day, closing last week a shade over US$1,208/oz. Trump's win has sparked speculation of a surge in inflation on the back of a big boost to infrastructure spending. This could prompt a more rapid increase in interest rates – hence gold's surprise slump in recent sessions. Analysts said prices were being hit after Trump's promised US$1 trillion splurge on infrastructure, which would affect inflation and add to pressure on the Federal Reserve to raise interest rates. Yellen, the Fed Chairperson, reiterated that a second rate rise in a year "could well become appropriate relatively soon." This is widely interpreted as December, especially since the expected capital markets' meltdown following a Trump victory has failed to materialise. (- Peter R Jones, Executive Vice President, Century Global Commodities Corporation )