Copper prices fell on Friday, as renewed concern about trade between the U.S. and China and a higher dollar pressured prices.
Contracts for September delivery fell 1.5% to $2.649 a pound at the Comex division of the New York Mercantile Exchange. Prices have fallen three sessions in a row.
“It doesn’t look like there’s any end in sight,” said Bob Haberkorn, a market strategist at RJO Futures, said of the trade concerns. “It doesn’t help that the dollar is up significantly.”
The WSJ Dollar Index, which measures the greenback against a basket of currencies, rose 0.3%, and is up 1% over the past month. A stronger dollar makes commodities more expensive for global buyers, damping investor demand.
Traders have focused in recent months on the trade dispute between the U.S. and China. Both countries have hit billions of dollars worth of each others’ goods with tariffs, and news reports suggested that more could be coming next week. Other reports said that President Trump rejected a European Union offer to axe tariffs on cars.
“The trade dispute does seem to be escalating again after all, as U.S. President Trump may well slap new punitive tariffs on imports of Chinese goods as early as next week,” said Commerzbank .
China consumes around half of the world’s industrial metals, making copper prices highly sensitive to its economic fortunes. Traders are concerned that the trade dispute with the U.S. will hurt growth and demand.
“The US-China trade war remains the most serious threat to the global demand for commodities,” said Scotiabank. “Speculative shorting has recently reached all-time highs for commodities like copper, which is typically seen as a bellwether of the global industrial cycle.”
Copper investors got some respite, however, from China’s official Purchasing Managers Index for the manufacturing sector. The index edged up to 51.3 in August from 51.2 in July, beating expectations for a fall. Yet sentiment among traders remained low.
Gold prices were slightly higher on Friday. September-dated contracts rose 0.2% to $1,200.30 per troy ounce.
Write to Benjamin Parkin at [email protected]