Copper Extends Slide on Demand, Rate Worries

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Copper prices fell for the third-straight session Monday as investors continued to weigh a possible economic slowdown amid trade tensions between some of the world’s biggest economies.

Front-month copper for March delivery declined 0.8% to $3.0695 a pound on the Comex division of the New York Mercantile Exchange. Prices have fallen 6.4% this year after hitting a nearly four-year high in late December, with some money managers worried that a global economic slowdown could crimp demand for industrial metals.

Some analysts are concerned that other countries will retaliate against U.S. tariffs on steel and aluminum, slowing international trade and weakening commodity consumption. Global finance ministers meeting this week in Buenos Aires are expected to focus on the possibility of a trade war.

The recent trade worries have added to unease about a possible economic slowdown in China, the world’s largest consumer of industrial metals, and the impact of higher interest rates. Commodities tend to struggle to compete with yield-bearing assets like Treasurys as borrowing costs rise, and the Federal Reserve is widely expected to raise rates again on Wednesday.

Copper has fallen in eight of the last 11 weeks as other risk assets like stocks and oil have wobbled.

Fears of “a cooling of the upbeat market mood” that has supported prices over recent months have hurt metals, according to Norbert Ruecker, head of macro and commodity research at Julius Baer.

Futures market positioning data suggest investor enthusiasm for commodities has begun to wane, and that “should lead to continued profit-taking and price pressure, namely in the oil and metals segment,” Mr. Ruecker said.

The latest Commodity Futures Trading Commission data released Friday showed that hedge funds and other speculative investors pushed net bets on higher copper prices to their lowest level since 2016 during the week ended March 13.

Investors will be tracking physical inventories and possible supply disruptions from the labor contract renegotiations with miners moving forward, as those factors have also swung prices in recent months.

The dollar rebounding from multiyear lows has hurt commodities of late, as a stronger U.S. currency makes materials denominated in dollars more expensive for overseas buyers. On Monday, the WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, was down 0.2%.

Despite copper’s lackluster start to the year, some investors expect prices to recover as Chinese economic data strengthens and interest rate and trade policies become clearer.

”We remain cautious on copper near term, especially ahead of the next [Fed] meeting, but see upside into midyear,” Bank of America analysts said in a recent note to clients.

Among precious metals, front-month gold for March delivery swung between small gains and losses and closed up 0.4% at $1,316.80 a troy ounce. Prices have fallen near their lowest level of the year leading up to this week’s Fed meeting.

Still, gold futures are up slightly for the year, and some think the combination of a weaker dollar and strong haven demand will support prices.

”If I look down the road five years from now, I feel fairly convinced that the dollar is going to weaken and gold is going to be an interesting investment to own,” said Adam Strauss, co-CEO and portfolio manager at Appleseed Capital, an investment firm in Chicago.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com and David Hodari at David.Hodari@dowjones.com


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