By Benjamin Parkin and David Hodari 

Copper prices fell to the lowest close in almost three months as tension between the U.S. and China continued to unsettle investors.

Front-month contracts for June fell 1.3% to $2.992 a pound at the Comex division of the New York Mercantile Exchange on Monday, the lowest since March 27. Prices have fallen around 10% from a peak earlier this month.

There is "concern globally about what trade wars mean for metals," said Nitesh Shah, director of research at WisdomTree. "Over the last couple of weeks or so, people have been thinking of the impact as a very negative thing for industrial metals."

Relations between the U.S. and China have deteriorated, with both countries moving to place tariffs on tens of billions of dollars of each others' goods. President Donald Trump is now also expected to introduce restrictions on Chinese investment in U.S. technology firms later this week.

Traders were betting that made the likelihood of a negotiated solution that avoided tariffs more distant, potentially hurting global growth and damping demand for industrial metals like copper. China consumes around half of the world's copper.

Mr. Shah said he thought the bilateral nature of the dispute could limit the fallout longer-term. The disruption to global supply chains stemming from a trade war could eventually boost metals prices, he said.

In the near term, however, a stronger U.S. dollar also had traders souring on copper. The greenback has rallied in recent months, making dollar-denominated commodities like copper more expensive for global buyers. The WSJ Dollar Index, which measures the dollar against a basket of currencies, slipped 0.1% on Monday.

Copper traders were watching labor negotiations at two copper mines controlled by Chilean state-owned firm Codelco that could potentially crimp supply, though the boost to prices was limited.

Workers at the Chuquicamata mine -- home to one of the world's largest copper deposits -- were on the verge of striking following the dismissal of 1,700 workers last week, according to Spanish news agency EFE. Chuquicamata produced 330,000 tons of copper last year.

Elsewhere, Codelco said late Friday that workers at its small Salvador operation had rejected a wage offer from the company, Reuters reported.

At the beginning of the year, investors forecast a turbulent year for labor negotiations, with around 35 contracts due to be negotiated. So far, few disputes have materialized.

With negotiations also currently under way between BHP Billiton and workers at its Chilean Escondida mine -- the world's largest copper mine, where strikes last year stymied production for 44 days -- investors were asking "whether it's the calm before the storm or whether those fears will just fizzle," said Hunter Hillcoat, an analyst at Investec.

Gold prices fell to a new six-month low on Monday. Tension between the U.S. and China hasn't prompted higher gold prices despite the precious metal's tendency to rise as a haven asset during times of geopolitical uncertainty. Instead, analysts said, the stronger dollar and rising U.S. interest rates have weighed down the market.

June-dated contracts fell 0.1% to $1,265.60 a troy ounce, the lowest close since Dec. 19.

Write to Benjamin Parkin at Benjamin.Parkin@wsj.com and David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

June 25, 2018 14:56 ET (18:56 GMT)

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