Updated from 12:00 p.m. EDT

Nickel prices spiked to all-time highs Wednesday as available supply continues to dwindle. Inventories of the metal held at the London Metal Exchange (LME) warehouses slid down a further 486 metric tons to 8,418, representing about two days of market consumption and raising further concerns about supply in an increasingly tight market.

Spot nickel reached $29,600 a ton in LME trading, the highest ever, before pulling back, and was trading around $27,200 Wednesday afternoon. Futures prices traded as high as $26,000, the highest level since 1987, according to market reports, before pulling back to approximately $24,750.

In other metals, contracts for September delivery of copper pulled back after an early rally, but were still up 3 cents to $3.665 a pound on the close of the Comex division of the New York Mercantile Exchange (NYMEX). Concerns that a potential strike in Chile's huge Escondida copper mine could disrupt supply seems likely to keep a floor under prices, but the potential for increased tightness is also attracting speculative interest.

"A big part of copper's recent strengthening is attributable to renewed fund buying," writes Edward Meir in a report published today by futures brokerage Man Financial.

Shares of Canadian nickel miners Inco ( N) and Falconbridge ( FAL) were trading up mid-afternoon. However, stock of Phelps Dodge ( PD) was barely changed. The company received Federal Trade Commission approval for its proposed merger with Inco and Falconbridge Wednesday. The deal still has the possibility of falling apart ; on Tuesday, Swiss miner Xstrata raised its hostile all-cash offer for Falconbridge by 12% to $16.2 billion.

The generally bullish sentiment was not restricted to copper and nickel miners; other stocks in the base-metals complex were also rising. Aluminum companies Alcoa ( AA) and Alcan ( AL) were trading up. Stocks of diversified mining giants BHP ( BHP) and Rio Tinto ( RTP) were sliding slightly.

Continued geopolitical tension helped propel the precious metals higher today as investors remained on edge after Tuesday's Mumbai bomb blasts, as well as a rapidly deteriorating situation in the Mideast. Gold is traditionally seen as a safe-haven investment in times of war. Comex gold futures closed up $8.20 at $651.30 per ounce, while silver rose a penny to $11.56 an ounce after having traded higher earlier. Trading on the NYMEX saw platinum closing up $13.60 to $1,267 an ounce, while palladium was up $0.95 to $329 an ounce.

Shares of the bullion exchange-traded funds (ETFs) iShares COMEX Gold Trust ( IAU), streetTRACKS Gold Shares ( GLD) and iShares Silver Trust ( SLV) rose, in line with metals prices.

Shares of gold producers Barrick Gold ( ABX), Freeport-McMoRan Copper & Gold ( FCX) and Newmont Mining ( NEM) were all trading down.

Shares of silver miner Coeur d'Alene Mines ( CDE) were also trading up 0.5%.

In the palladium patch, North American Palladium ( PAL) and rival Stillwater Mining ( SWC) were trading down against the metal. North American Palladium received one of the worst overall ratings from Wall Street analysts over the last month, according to a report from Dow Jones Newswires posted Monday.