Commodities markets suffered another blow on Monday as China’s currency tumbled against the US dollar, reducing the purchasing power of the biggest buyer of everything from oil to copper to soybeans.

In the latest escalation of the trade war roiling global markets, China allowed the yuan to breach 7 per dollar for the first time since 2008. Nearly all major global commodities are priced in US dollars, so a weaker currency means an importer can buy less with the same amount of local money. Crude, industrial metals and crops all dropped.

Psychological effect

“The move through the 7-yuan-per-dollar psychological level is a big factor today,” said Andrew Driscoll, head of resources research at CLSA Ltd. “No question that the escalation in trade tensions is weighing significantly on sentiment and the demand outlook for commodities.”

Commodities have suffered during US President Donald Trump’s trade war on China, mostly on expectations global economic growth will slow, which saps demand for raw materials. Tensions escalated after his surprise announcement last week to slap an additional 10 per cent levy on $300 billion of Chinese goods.

Gold gains

Losses were led by iron ore on the Singapore Exchange. Brent crude on ICE Futures Europe lost as much as 1.6 per cent , as did copper on the London Metal Exchange.

Gold bucked the trend as investors sought safety in precious metal. Spot prices gained as much as 1.6% to $1,463.58 an ounce, the highest in since May 2013.