Platinum prices declined in European trade for the second session to three-month lows as the dollar strengthened against a basket of major rivals following strong US inflation outlook data.

Industrial metals remain under pressure from negative outlook for actual demand as the global economy faces recession risks. 

Prices Today

Platinum prices fell 1.1% to $923.15, a November 4 lows, with a session-high at $937.44, after losing 2.6% yesterday, the fourth loss in five days.

The Dollar

The dollar index rose 0.4% on Wednesday against most major rivals, hurting dollar-denominated commodity futures. 

Dollar's advance comes after strong US consumer data in January, showing the Federal Reserve's battle with inflation isn't over yet. 

Fed officials said on Tuesday the Fed will have to continue raising interest rates gradually to overcome inflation, probably more than estimated before. 

After the inflation data, pricing for a 0.25% Fed rate hike in March rose from 88% to 92%, while pricing for a 0.25% hike in May rose from 68% to 77%.

Actual Demand

Nearly 41% of global platinum demand comes from the car sector, which was hurt recently by higher prices and lower demand.

Actual demand on platinum remains murky as the global economy faces recession risks, threatening industrial activities worldwide. 

Sterling declined against dollar off two-week highs on track for the first loss in three sessions on profit-taking. 

The decline comes after UK inflation data slowed down for the third straight month in January, reducing pressure on Bank of England policymakers and reducing chances for a 0.5% rate hike in March. 

Dollar's rebound comes after bullish US inflation data which boosted the case for multiple more rate hikes by the Federal Reserve this year. 

GBP/USD fell 0.7% to 1.2085, with a session-high at 1.2181, after closing up 0.3% yesterday, marking two-week highs at 1.2270 following positive UK labor data.

Analysts believe the recent data showed a tight labor sector, which continue to underpin the growth of wages. 

Therefore such data maintained the probability of more rate hikes by Bank of England, which will provide support for the pound in the future. 

UK Inflation

UK consumer prices rose 10.1% y/y in January, slowing for the third straight month from 10.5% in the previous reading, and below estimates of 10.3%.

Core prices, excluding food and energy, rose 5.8%, below estimates of 6.2%, and down from 6.3% in the previous reading.

The Dollar

The dollar index rose 0.3% on Wednesday on track for the first profit in three sessions against a basket of major rivals. 

US inflation data showed prices rose more than expected, showing the battle with inflation is far from done. 

UK consumer prices rose 10.1% y/y in January, slowing for the third straight month from 10.5% in the previous reading, and below estimates of 10.3%.

Core prices, excluding food and energy, rose 5.8%, below estimates of 6.2%, and down from 6.3% in the previous reading. 

Most US stock indices closed lower on Tuesday after disappointing inflation data, while NASDAQ gathered momentum after strong demand on the tech sector.

Inflation Muscles up Again

US consumer prices rose 0.5% in January, above estimates of 0.4%. 

On a yearly basis, prices rose 6.4% last month, up from 6.2% in the previous meeting. 

Core prices, excluding food and energy, rose 0.4% last month, and 5.6% y/y.

The Fed and Inflation

Such data means the Fed will continue hiking interest rates at upcoming meetings, in turn threatening the economy under threat of recession.

Dow Jones fell 0.5%, or 156 points to 34,089, with a session-high at 34,331, and a low at 33,827. 

S&P 500 fell 0.1%, or a point to 4,136, with a session-high at 4,159, and a low at 4,095. 

NASDAQ rose 0.5%, or 68 points to 11,960, with a session-high at 11,999, and a low at 11,760.