Nickel prices rose on Wednesday as the dollar slid against major rivals following major US inflation data. 

US consumer prices rose 3.4% y/y in April, down from 3.5% in March.

Core prices rose 3.6% y/y in April, down from 3.8% in March, marking the lowest rate since April 2021. 

On a monthly basis, consumer prices rose 0.3% in April, down from 0.4% in March. 

This a huge decline from the peak of 9.1% scaled in June 2022. 

Fed Chair Jerome Powell said he expects US inflation to decline in upcoming months, which was taken as a sign of impending policy easing. 

However, Powell cautioned he’s still not completely confident about the estimates, although he did rule out another rate cut given the recent data. 

Nickel and other industrial metals witnessed gains in prices as the west continues to impose new sanctions on Russia, a major producer of nickel in addition to copper and aluminum. 

As of March, 91% of aluminum inside The London Metals Exchange inventories came from Russia, with 36% of nickel there, and 62% of copper also from Russia. 

Otherwise, the dollar index fell 0.6% as of 16:44 GMT to 104.4, with a session-high at 105.06, and a low at 104.3. 

On trading, nickel spot prices rose 0.2% to $18.9 thousand a tonne as of 16:55 GMT. 

Global oil prices skidded in American trade on Wednesday to three-month lows, sharpening losses for the second straight session on grim outlook for global demand, after the International Energy Agency reduced its outlook for global demand this year. 

Such developments overshadowed initial data that showed a large US crude inventory drawdown last week.

Prices

US crude fell 2.2% to $72.72 a barrel, the lowest since February 26, with a session-high at $78.71. 

Brent fell 2% today to $81.08 a barrel, the lowest since February 26, with a session-high at $83.03. 

US crude lost 1% on Tuesday, while Brent  shed 0.8% amid growing concerns about global demand.

Global Demand 

The International Energy Agency said in its April report that it expects global oil demand to grow by 1.1 million bpd this year, down 140 thousand bpd from the previous month’s forecasts as demand from developed economies decline. 

The EIA also reported an increase of global crude inventories in March by 34.6 million barrels as trade disruptions led to a sharp increase in oil stocks inside cargo ships. 

Conversely, OPEC expects global oil demand to increase by 2.25 million bpd this year, same as March forecasts. 

The organization also expects total OPEC+ production to fall by 48 thousand bpd in April to 26.575 million bpd.

US Stocks 

Initial data from the American Petroleum Institute showed US crude stocks fell by 3.1 million barrels in the week ending May 10, passing estimates of a 1.4 million barrels drawdown. 

Now traders await official data on US crude stocks from the EIA later today, expected to show a drop of 0.4 million barrels. 

 US consumer prices rose 0.3% m/m in April, missing estimates of a 0.4% increase.

Core prices, excluding food and energy, rose 0.3%, same as expectations, and down from 0.4% in the previous reading. 

Gold prices rose in European trade on Wednesday, extending gains for the second straight day and heading for multi-week highs as both the dollar and US treasury yields lose ground.

It comes ahead of important US consumer prices data which will cast light on the future of US interest rates.

The data comes following producer prices data released yesterday, which included sharp downward revisions for March, in turn boosting the odds of a Fed rate cut in the summer.

Prices 

Gold prices rose 0.6% today to $2372 an ounce, with a session-low at $2355. 

The precious metal rose 0.95% yesterday, resuming gains and moving away from two-week highs at $2378. 

The Dollar

The dollar index fell 0.25% on Wednesday, extending losses for the third straight session and plumbing two-week lows at 104.81 against major rivals.

A weaker dollar makes gold-denominated futures cheaper to holders of other currencies.

US Yields

US 10-year treasury yields fell by 0.5% today to a five-week low at 4.418%, underpinning non-yielding assets, following US producer prices data. 

US Producer Prices

US producer prices rose 0.5% m/m in April, passing estimates of 0.3%, however, March’s reading was revised to show a contraction of 0.1% instead of a 0.2% increase. 

Core producer prices rose 0.5% m/m in April, above estimates of 0.2%, with the March reading revised to show a 0.1% decline.

On a yearly basis, US producer prices rose 2.2% in April, with the March reading reduced to show a 1.8% increase. 

US Rates 

Following the data, the odds of a Fed interest rate cut in July rose to 30%, and the odds of such a cut in September rose to 70%.

According to the Fedwatch tool, investors are expecting two interest rate cuts overall by the Federal Reserve this year. 

US Producer Prices

Now investors await US producer prices data later today, expected to clock in at 3.4% for April, down from 3.5% in March. 

The SPDR

Gold holdings at the SPDR Gold Trust remained flat yesterday at a total of 831.93 tonnes, the lowest in a week.