Metals Prices Rally, Shrugging Off Trade Fears

By Anonymous

Base metals prices were broadly higher Wednesday, recovering from increased concerned from investors about growing trade frictions between the U.S. and China.

The price of copper was up 1.24% at $5,953 a metric ton in midmorning trade in London, more than reversing its prior day losses to sit 1.2% higher this week.

Gold was down 0.26% at $1,195.18 a troy ounce, with precious metals broadly lower as the U.S. dollar remained resilient in the wake of recent gains.

The WSJ Dollar Index -- which measures the U.S. currency against a basket of 16 others -- recently was flat, having climbed more than 3% over the past three months. The Chinese yuan, which is also seen as a proxy for trade worries, was last up 0.1% versus the dollar.

Metals investors revealed their macroeconomic anxieties Tuesday, amid reports that China will ask the World Trade Organization for permission to impose sanctions on the U.S. That came days after President Trump said he was considering imposing a third round of tariffs on $267 billion of Chinese goods.

Traders had expected the White House to announce a fresh tranche of levies late last week, but the absence of any such tariffs suggested that the Trump administration was considering lobbying efforts by U.S. businesses against tariffs, according to Ole Hansen, head of commodity strategy at Saxo Bank.

“The fact we haven’t seen anything announced on the tariff front could indicate Trump’s being pressured by U.S. companies highlighting the impact of additional tariffs on their ability to operate,” Mr. Hansen said.

The London Metal Exchange base metal index fell by 1.5% Tuesday, and was last trading only just above its August 13-month low, according to Commerzbank analysts in a note.

China accounts for roughly half of global copper demand and is a major consumer of other base metals. London Metal Exchange three-month copper futures have declined 18% so far this year, with investor sentiment repeatedly dented by deepening concerns about the ongoing trade dispute between Beijing and Washington and the overall health of emerging market economies.

“There appear to be fears that tariffs will soon be slapped on all goods flowing between the two countries. We can find no other explanation for the negative stance of market participants,” Commerzbank analysts said.

Those broader macroeconomic considerations have in recent months distracted investors from metals-specific news, and prices have been driven almost entirely by global trade headlines, analysts say.

Looking ahead, investors were keeping an eye out for speeches from Federal Reserve board member and U.S. economic indicators due later Wednesday, and Chinese foreign direct-investment numbers, expected Thursday.

Among other precious metals, silver was up 0.28% at $14.19 a troy ounce, palladium was down 0.28% at $974.30 a troy ounce and platinum was down 0.2% at $791.50 a troy ounce.

Among other base metals, zinc was up 2.4% at $2,375.50 a metric ton, aluminum was up 0.34% at $2,057 a metric ton, tin was down 0.45% at $18,955 a metric ton, nickel was up 1.75% at $12,425 a metric ton and lead was up 1.88% at $2,010.50 a metric ton.

Write to David Hodari at [email protected]