By David Hodari 

LONDON--Metals prices continued to recover at the start of the week, rallying amid a resurgence in the Chinese yuan and as greater stability in other emerging-market currencies, including the Turkish lira, eased tensions on the global economy.

The price of copper was up 1.18% at $6,004 a metric ton in midmorning trade, although remained 2.1% lower on-the-week.

Similarly, gold prices climbed 0.3% to $1,188.33 a troy ounce, but was still down 0.44% from its level a week ago.

Both metals hit lows not seen in more than 12 months last week, when spiraling tensions between Washington and Ankara raised fears about emerging-market contagion at the same time that weak data pointed to risks to the growth of the Chinese economy.

Those developments saw the U.S. dollar soar against emerging-market currencies, making dollar-denominated commodities more expensive for other currency holders. But after Beijing and Washington raised the possibility of low-level trade talks, those foreign exchange moves started to reverse Friday.

The Chinese yuan was last up 0.33% versus the dollar, with the WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, last up 0.18%.

"The fact that the Chinese yuan has stopped depreciating and has been on the up again for the last three days appears to be playing a role" in base metals' recovery, Commerzbank analysts said in a note.

But investors expecting copper to sustain its early-week upsurge are likely to be disappointed in the coming weeks, analysts say.

"Last week's news of fresh trade talks helped things, but we were optimistic last time and we know what happened since. Investors' skin has been hardened to comments from Donald Trump," said Geordie Wilkes, analyst at Sucden Financial Research.

While last week's moves highlighted the market's potential for volatility, lower seasonal trading volumes also played a role, and the growing market expectation for two more Federal Reserve interest rate increases in 2018 may sustain the rise in the U.S. dollar through the second half of the year, Sucden's Mr. Wilkes said.

Data from CME Group put the chances of a rate increase at the Fed's next meeting on Sept. 26 at 96%.

Aside from the macroeconomic outlook, bullish forecasts for copper prices based on supply considerations were dealt a blow at the end of last week, when workers at BHP Billiton's Chilean Escondida operation, the world's biggest copper mine, accepted management's most recent wage offer.

The market had long expected a repeat of last year's 44-day strike, which buoyed copper prices.

In a week absent of significant Chinese economic data releases, investors were keeping an eye out for any further trade talk news, as well as speeches from Federal Reserve board members.

Among other precious metals, silver was down 0.27% at $14.78 a troy ounce, palladium was up 0.57% at $918.75 a troy ounce and platinum was up 1.17% at $795.95 a troy ounce.

Among other base metals, zinc was up 0.31% at $2,396 a metric ton, aluminum was up 2.44% at $2,081.50 a metric ton, tin was up 0.11% at $18,750 a metric ton, nickel was up 0.85% at $13,670 a metric ton and lead was up 0.9% at $2,018 a metric ton.

Write to David Hodari at David.Hodari@wsj.com

(END) Dow Jones Newswires

August 20, 2018 06:25 ET (10:25 GMT)