Copper prices swung to bear-market territory Thursday as an escalating U.S.-China trade war and stronger dollar forced traders to flee metals.
Copper prices fell 1.14% to $2.64, taking the total losses to 20% from its recent peak of $3.30 in June, the definition of a bear market.
The China and U.S. tariffs on each other's goods that went into effect Thursday served as a reminder to market participants that the world's largest two economies remain locked in an escalating trade war, even as both nations continued a second day of trade talks.
The United States imposed 25% tariffs on an additional $16 billion of Chinese goods just after midnight ET Thursday, prompting China to respond with in-kind measures against U.S. goods.
China, the largest consumer of commodities, has seen its economy come under heavy pressure in a months-long trade dispute, raising doubts about demand for commodities like copper.
China has strived to match the U.S. tariffs dollar-for-dollar, but the U.S. has more rounds to fire as it exports far less to China, whose economy is more reliant on exports.
Trade-war concerns, however, did not prompt demand for safe-haven Gold as the stronger dollar and concerns about future interest rate hikes kept a lid on the yellow metal.
Gold futures for December delivery on the Comex division of the New York Mercantile Exchange fell by 0.75%, to $1,194.30 a troy ounce.
The minutes of the Federal Reserve, released Wednesday, showed officials were content for further increases in interest rates on expectations for ongoing above-trend growth.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.54% to 95.51.
In a rising interest rate environment, investor appetite for gold weakens as the opportunity cost of holding the precious metal increases relative to other interest-bearing assets such as bonds.
In other metals trade, zinc and aluminum prices managed to hold gains, but Platinum and nickel fell sharply.
Zinc prices rose 0.31% at 2,465.75, while aluminum prices rose 0.23% to 2,074.00.
Silver futures fell 1.39% to $14.55 a troy ounce, platinum futures lost 1.97% to $778.10, while nickel futures fell 2.54% to 13,240.00.
