Singapore: Gold rebounded after the biggest drop in more than a year as investors reminded themselves of a world that’s beset by risk, from the prospect of further currency weakness to the final stretch of the US presidential election.

Spot gold climbed as much as 0.5 per cent to $1,275.28 an ounce and traded at $1,272.40 at 2:53pm in Singapore, according to Bloomberg generic pricing. Prices tumbled 3.3 per cent on Tuesday, the most since July 2015, as prospects for higher US rates and less stimulus in Europe spurred a sell-off.

“It’s a buying opportunity,” Bob Takai, chief executive officer and president of Sumitomo Corp. Global Research Co, said from Tokyo. Uncertainty about “the European currency, uncertainty about the sterling pound, all these things point to the direction that gold is going to be favoured.”

After a blistering first half when central bank accommodation and Britain’s Brexit vote lifted gold, prices have come under pressure as Federal Reserve policymakers talk up the outlook for higher borrowing costs and there’s speculation that the European Central Bank may taper stimulus. Gold may bounce back given the risks from the US election to Britain starting talks to leave the European Union, according to Oversea-Chinese Banking Corp., which also highlighted lacklustre inflationary pressures.

Miners

“As quickly as gold fell, as quickly gold could rally back,” said Barnabas Gan, an economist at OCBC and the most accurate forecaster of the metal in the third quarter, according to data compiled by Bloomberg. “Weak inflationary pressures may once again lift gold,” Gan said in a report on Wednesday.

While prices sank on Tuesday, pummeling miners’ shares, global holdings in exchange-traded products expanded. The assets rose 0.2 per cent to 2,036.5 metric tonnes, according to data compiled by Bloomberg. That’s near the peak of 2,039.9 tonnes reached on August 11, which was the highest since 2013.

Miners fell on Wednesday. Newcrest Mining Ltd, Australia’s top producer, lost 5.1 per cent in Sydney to the lowest since September 16, while Evolution Mining Ltd sank 7.9 per cent. In Hong Kong, Zijin Mining Group Co slid.

While some further downward pressure is still expected from a Hillary Clinton victory in November over her Republican rival, Donald Trump, low real interest rates will ensure precious metals remain attractive, BMI Research said in an October 4 report. Bullion may average $1,400 next year, it said.