Copper, Gold Slump on Trade War Jitters

Source:

". . .the attractiveness of a trade war when the global supply chain is so integrated is limited."

Copper futures sank nearly 2% on Monday, as concerns about a trade war between China and the U.S. fueled concerns about the global economy, fueling safe-haven demand for the dollar and pressuring commodities.

Over the weekend, Washington imposed stiff tariffs on Chinese-made tires, and China said it would launch an anti-dumping investigation into U.S. sales of chicken and auto products.

Copper for December delivery was last down 5 cents, or 1.6%, at $2.80 a pound, after earlier falling to a low of $2.76.

Safe-haven demand for the dollar also pressured precious metals, such as gold, and other commodities such as crude oil.

The dollar index stood at 76.976, from 76.662 late Friday.

Gold for December delivery was down $7.00, or 0.7%, at $999.40 an ounce.

Markets, however, showed a fairly limited reaction to the trade jitters.

"Although the temptation for protectionism is presumably stronger during a period of global economic slump, the attractiveness of a trade war when the global supply chain is so integrated is limited," said Steven Englander, currency strategist at Barclays Capital, in a note.

"Focusing on growth, it is pretty clear that all countries would quickly be losers from a trade conflict," he said.

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