Bank of Canada announced today a rate hike of 25 basis points to 4.5% as expected by the markets.

Canada's inflation recently hit 6.3% y/y in December, showing signs of slowing down.

Nickel prices rose on Wednesday as dollar fell against a basket of major rivals and amid expectations of improving global demand. 

It comes despite uncertainty about economic recession or a growth slowdown in the US and the global economy. 

Such outlook reflect investors' pessimism towards persistent inflationary pressures and subsequent policy tightening.  

However, some major international institutions like the IMF held on beliefs that the US economy might avoid a recession this year, 

Otherwise, the dollar index fell 0.1% to 101.8, with a session-high at 102.1, and a low at 101.7. 

Nickel is used extensively in the steel industry and by carmakers in electric batteries. 

Nickel spot prices rose 1% to $28.4 thousand a tones as of 15:10 GMT. 

Dollar rose in European trade against a basket of major rivals away from recent eight-month lows amid improving demand on the greenback from low levels. 

However the gains remain limited as markets fully priced in a reduced 0.25% rate hike by the Fed in February. 

The Index

The dollar index rose 0.1% to 102.12, with a session-low at 101.77, after losing 0.1% yesterday, edging closer back then to eight-month lows at 101.52. 

Fed Rates

Pricing for a 0.25% rate hike by the Federal Reserve in February stands at 100%, slowing it down from recent 0.5% rate hikes.

Growth Data

Markets are avoiding big positions on the dollar ahead of US growth data in the final quarter of 2022, expected tomorrow which will provide important clues on the pace of policy tightening.

The Fed

The Federal Reserve is holding its first policy meeting of the year next week to assess growth and inflation developments and decide on policy, with analysts expecting a reduced 0.25% rate hike. 

Gold prices fell in European trade for the first time in three sessions off nine-month highs on profit-taking while dollar rebounds. 

Now investors await US GDP data for the fourth quarter, expected to provide more clues on the pace of policy tightening in the US.

Gold Prices Today

Gold prices fell 0.6% to $1,925 an ounce, with a session-high at $1,939, after rising 0.3% yesterday, the second profit in a row, with a nine-month high at $1,942 as dollar weakens against a batch of major rivals. 

The Dollar

The dollar index rose over 0.1% away from eight-month lows against a basket of major rivals, pressuring dollar-denominated precious metals. 

Traders continue to shun big positions ahead of US growth data, expected tomorrow and crucial for gauging the pace of policy tightening. 

The Federal Reserve is holding its first policy meeting of the year next week to assess growth and inflation developments and decide on policy, with analysts expecting a reduced 0.25% rate hike. 

Estimates

Markets are awaiting US GDP growth data before taking positions, with weak data forcing the Fed to slow down its pace of policy tightening and boosting gold prices, and vice versa. 

Analysts believe that for gold to reliably pierce the $2,000 levels, dollar has to continue its decline. 

The SPDR

Gold holdings at the SPDR Gold Trust rose 0.28 tones yesterday to a total of 917.34 tones, the highest since December 27.