Metals Slide on New Tariff Threat

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LONDON—Metals prices came under another wave of selling pressure on Friday, after fears of a trade war between the U.S. and China were boosted overnight by President Donald Trump’s threat of a new round of tariffs.

Copper was down 0.89% at $6,757.50 a metric ton in midmorning trading, with all base metals lower.

Gold, meanwhile, was also down 0.15% at $1,324.55 a troy ounce, as the dollar ticked higher ahead of the release of U.S. nonfarm jobs figures, due out later in the day.

Mr. Trump said Thursday he was considering imposing tariffs on an additional $100 billion in imports from China. That would be on top of the levies on $50 billion-worth of Chinese goods he announced earlier in the week and could provoke another retaliatory salvo from Beijing.

The White House announced its first round of tariffs on steel and aluminum imports at the end of February, and sentiment on base metals has been stung in the time since. Prices have dropped for every metal in that basket over the past month, with aluminum the hardest hit, down 6.9%, and copper 3.3% lower.

A Chinese public holiday on Friday meant that trading volumes were lower than normal, making it “hard to read too much into anything just yet,” said Matt France, head of Asian institutional metals sales at Marex Spectron, in a note.

That said, copper and nickel displayed a sharper reaction than their base metals peers to those trade headlines, Mr. France added.

While sentiment on metals has taken a hit from an increased perception of geopolitical risk in recent weeks, traders’ next moves will depend on China’s response, said Carsten Menke, commodities analyst at Julius Baer.

“China has been very targeted in its retaliation so far and has been very focused on talking and finding a solution. You have a rational China versus an irrational U.S. government,” Mr. Menke said. “Sentiment’s also key in equities as well as metals, and things have gotten choppy.”

While Chinese economic data have proven resilient so far this year and metals demand has picked up in recent weeks “fears of derailing global growth” could harm the rebound in activity, analysts at ING said in a note.

Investors were continuing to monitor both the U.S. jobs data and any further remarks from Washington and Beijing.

Among precious metals, silver was down 0.55% at $16.31 a troy ounce, platinum was down 0.15% at $910.95 a troy ounce and palladium was down 0.03% at $907.95 a troy ounce.

Among base metals, aluminum prices were down 0.72% to $1,992.50 a metric ton, zinc was down 0.75% to $3,217 a metric ton, tin was down 0.24% at $21,050 a metric ton, nickel was down 2.32% at $13,055 a metric ton and lead was down 1.24% at $2,356.50 a metric ton.

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