Nickel price analysis as the latest scam hits JP Morgan, Trafigura

Nickel price continued its downward trend even as traders reflect on the recent scam that has roiled the industry. The Dow Jones Commodity Index Nickel has dropped to $512, the lowest point since November last year. It has fallen by over 33% from its highest point in December 2022. At the LME, nickel was trading at $22,797.

Nickel scams are rising

The biggest nickel news is the ongoing scandal in the industry. On Friday, it was discovered that the London Metal Exchange found bags of stones in its storage instead of nickel. The amount of nickel was valued at about $1.3 million.

More revelations have come in the past few days. On Tuesday, it was revealed that JP Morgan, the giant American bank, owned some of this nickel. And in another report, the company said that Trafigura, also received the nickel. Trafigura is one of the biggest commodity traders in the world.

Therefore, these reports show that the nickel industry has a big scam problem. Just a few months ago, Trafigura was caught up in another scam, where it received ships full of a metal that the company thought was nickel. It has now sued Prateek Gupta, an Indian trader, who it has accused of running a systematic fraud.

The nickel market has been going through numerous challenges in the past few months. In London, the LME is being sued for a short squeeze that happened after Russia’s invasion of Ukraine. We wrote about the short squeeze here. It is being sued by Elliot Management and Jane Street, a leading market maker.

Meanwhile, JP Morgan, a leading player in the nickel market, announced that it had lost $120 million during the short squeeze. As such, there is a likelihood that the company will reconsider its exposure to the commodities industry.

Dow Jones Commodity Index nickel forecast

The daily chart shows that nickel price has been in a strong downward trend in the past few days. It managed to move below the key support at $594, the lowest level on January 11. The index has moved below the 25-day and 50-day moving averages, while the RSI has continued falling. It has been dropping after peaking at 79.53 in December.

Therefore, in trend-following, this performance means that nickel prices will continue falling, as sellers target the key point at $480. This price was the lowest point on October 4 last year.