Nickel prices declined on Tuesday as the US dollar edged higher against most major currencies, while investment funds continued to bet that the industrial metal may have reached a bottom.

It is difficult to believe that nickel once surged so dramatically it nearly caused a collapse of the London Metal Exchange (LME) just two years ago. Yet for most of this year, the LME market has drifted sluggishly near five-year lows, hovering around $15,000 per metric ton.

Nickel, used in stainless steel production and electric vehicle batteries, is weighed down by a massive supply glut fueled by Indonesia’s output boom. Daily stockpile reports from the LME reinforce this, with registered and unregistered inventories rising steadily to 308,000 tons — the highest since the exchange began publishing off-warrant data in early 2020.

Funds Turn Bullish Despite Weak Market Signals

Funds had been betting against nickel last year, maintaining net short positions until June. While many investors remain bearish, long positions have been building since mid-April. Net long contracts now stand at 45,321 — equal to 272,000 tons — the most bullish stance since March 2022, when nickel prices spiked so violently that LME halted trading.

Still, three-month nickel futures on the LME have been stuck between $14,800 and $16,000 since May, offering little momentum. The bullish case appears to rest on the collective logic that if nickel cannot fall further, it must eventually rebound.

Indonesian Supply Boom Pressures the Market

Indonesia’s production surge has flooded LME warehouses. Chinese-origin nickel within LME inventories has risen from zero in August 2023 to 65% by the end of last month, driven by shipments of Indonesian ore refined into intermediates and sent to China for further processing. Indonesian-branded nickel also began entering the system directly last year, with 8,838 tons recorded in August.

Given the near-daily inventory increases, the resilience of nickel prices is striking, leading some investors to believe the metal may have found a floor near production costs.

Can Indonesia Rein In Output?

Any sustained recovery in prices depends largely on whether Indonesia curbs runaway production. Most other producers have been forced out, with around half a million tons of supply exiting the market in recent years, according to Macquarie analysts. By contrast, Indonesia’s output continues to soar, rising 21% year-on-year to 1.3 million tons in H1 2025, or 69% of global production.

Signs are emerging of tighter regulation, including government task forces seizing mining land lacking forestry permits. The strongest tool remains mine production quotas, with Jakarta planning to reinstate annual caps next year to improve governance and balance supply.

Meanwhile, ore availability has been constrained by delays in permits, poor weather, and declining grades, even prompting Indonesia to import small but steady volumes from the Philippines since early 2024. Whether the government tightens further will decide the outlook — and nickel bulls can only hope it does.

Elsewhere, the US dollar index rose 0.1% to 97.4 by 14:56 GMT, hitting a high of 97.4 and a low of 97.2. Spot nickel prices fell 1.1% to $15,182 per ton by 15:07 GMT.

Bitcoin traded largely stable on Tuesday but extended losses following a massive $1.5 billion wipeout in the digital derivatives market during the previous session, as traders braced for heightened volatility ahead of one of the largest options expiries in the market’s history.

Investors were also awaiting Federal Reserve Chair Jerome Powell’s speech later in the day, which could offer fresh signals on monetary policy direction after last week’s rate cut.

At last check, the world’s largest cryptocurrency was down 0.1% at $112,711.6 by 01:55 a.m. ET (05:55 GMT), hovering near a two-week low.

$1.5 Billion Liquidations… and Powell in Focus

Bitcoin slid more than 3% on Monday, briefly breaking below $112,000 before trimming some of its losses. Data from Coinglass showed that roughly $1.5 billion worth of long positions across crypto markets were liquidated in a single day, marking the largest shakeout in months.

More than 400,000 traders saw their leveraged bets wiped out. Ether dropped as much as 9%, while altcoins like Dogecoin also suffered sharp declines.

Reports indicated the selloff was fueled by overleveraged positions and thin liquidity, which amplified price swings. Losses were further compounded by options traders positioned for outsized market moves.

Massive Options Expiry Ahead

The market now eyes a major expiry of crypto options on Friday. Data from Deribit suggest that over $23 billion worth of Bitcoin and Ether contracts are set to expire, making it one of the largest such events on record.

Fed Policy and Inflation Data in Spotlight

The Federal Reserve remains the central focus this week. Powell’s speech follows remarks on Monday by Governor Stephen Miran, with several other Fed officials also scheduled to speak in the coming days.

The Fed cut interest rates by 25 basis points last week, while its “dot plot” indicated the possibility of two more cuts this year. However, officials emphasized a cautious tone, stressing that inflation remains above target and that the pace of easing will depend on incoming data.

Markets are also awaiting Friday’s release of the core Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge.

Beijing’s Quiet Warning on Tokenization in Hong Kong

Separately, Reuters reported that China’s securities regulator has informally told some mainland brokerages to halt real-world asset (RWA) tokenization activities in Hong Kong, underscoring Beijing’s concerns over the rapid growth of digital products beyond its borders.

The guidance, issued in recent weeks, aimed to ensure such products are backed by genuine businesses and that risk management practices improve.

RWA tokenization involves converting traditional assets such as bonds or real estate into blockchain-based tokens. Hong Kong has been promoting the sector as part of its push to become a global digital finance hub, attracting Chinese brokerages looking to roll out new products.

Oil prices rose on Tuesday, even as investors continued to assess global supply expectations, after the Iraqi government and the Kurdistan Regional Government reached a preliminary agreement to restart a key crude pipeline.

Brent crude futures gained 14 cents to $66.71 a barrel by 09:19 GMT, while US West Texas Intermediate (WTI) crude climbed 21 cents to $62.49 a barrel, erasing earlier minor losses.

Both Brent and WTI had declined over the previous four sessions, shedding around 3% of their value.

Giovanni Staunovo, an analyst at UBS, said: “There are still supportive factors, such as low oil stockpiles in OECD countries. But on the other hand, rising crude exports from OPEC+ remain a drag on prices, along with the absence of new sanctions targeting Russian oil exports.”

Traders are closely watching developments in the Middle East after Baghdad and the Kurdish regional government reached an agreement with oil companies on Monday to resume crude exports via Turkey, according to Reuters citing oil officials. The officials added that the deal is pending Iraqi cabinet approval on Tuesday.

The breakthrough would allow exports of around 230,000 barrels per day from Iraq’s Kurdistan region, which have been halted since March 2023.

Overall, the global oil market is bracing for oversupply and weakening demand, weighed down by the rapid adoption of electric vehicles and the economic fallout from US tariffs.

In its latest monthly report, the International Energy Agency said global oil supply is set to grow at a faster pace this year, with the surplus expected to widen in 2026 as OPEC+ output expands alongside rising non-OPEC supply.

Still, risks loom over the market, with traders watching whether the European Union will push forward stricter sanctions on Russian oil exports, as well as any escalation of geopolitical tensions in the Middle East.

A preliminary Reuters poll on Monday showed that US crude inventories likely rose last week, while gasoline and distillate stocks were expected to have declined.

Silver prices rose in the European market on Tuesday, extending gains for the fourth consecutive session after breaking above $44 an ounce for the first time since 2011, setting a new record high. The rally was supported by continued weakness in the US dollar.

The move was also fueled by accelerating demand from retail investors, who view silver as undervalued compared to gold, which continues to hit fresh all-time highs.

Price Overview

Silver prices today: The metal climbed 0.6% to $44.34 an ounce, the highest since May 2011, from an opening level of $44.07, after touching a low of $43.64.

At Monday’s settlement, silver prices gained 2.3% in their third straight daily advance, supported by robust demand for the white metal.

US Dollar

The US dollar index slipped 0.1% on Tuesday, marking a second consecutive decline and moving away from a two-week high of 97.82, reflecting ongoing weakness against a basket of major global currencies.

Beyond profit-taking and corrective moves, the dollar remains under pressure from growing expectations of further Federal Reserve interest rate cuts in the coming months.

US Interest Rates

Fed Governor Steven Miran said on Monday that the central bank is underestimating how restrictive its current policy stance is, warning that the labor market will be at risk if significant rate cuts are not delivered.

According to CME’s FedWatch tool, markets are currently pricing in a 90% probability of a 25-basis-point rate cut at the October Fed meeting, with just a 10% chance of no change.

Jerome Powell

Investors are awaiting Fed Chair Jerome Powell’s remarks later today at the Greater Providence Chamber of Commerce’s Economic Outlook Luncheon in Rhode Island, where he is expected to provide more clarity on the outlook for US monetary policy.

Retail Demand

As retail investors seek safe-haven assets amid the ongoing global shift toward looser monetary policy, silver has emerged as a cost-effective option.

The current surge in silver prices reflects growing recognition among retail investors that the white metal remains significantly undervalued compared to gold, which continues to set historic highs.