Copper prices retreated on Thursday on a potential delay in U.S. interest rate cuts ahead of key inflation data next week and a lack of appetite in the physical market after recent rallies.

Three-month copper on the London Metal Exchange (LME) was down 0.5% at $9,858 per metric ton in official rings.

"Interest rates may not be changing maybe until end of the year. And after the technical jump of copper to $10,000 last week, the demand picture is not picking up at that level," said Sucden's Robert Montefusco.

U.S. Federal Reserve continued to be cautious on rate adjustments, with an emphasis on getting inflation back to the 2% target.

April consumer prices index (CPI) data is due on May 15.

Interest rates staying high would support the U.S. dollar, which in turn makes greenback-priced metals pricier for holders of other currencies.

LME copper has gained 17% so far this year. Copper in Chicago and Shanghai's most traded copper front-month contract have rallied by 18% and 14%, respectively.

Key consumers including copper wire and cable makers in China that rarely hedge were hesitant to pick up copper at near record prices, leaving copper inventory in warehouses monitored by the Shanghai Futures Exchange (ShFe) at a four-year high.

China's copper imports fell by 7.6% in April to 438,000 tons from a month ago.

But Montefusco said copper's downside is limited with "a strong lining of positions at $9,950 a ton" and that many commodity trading advisor (CTA) funds and traders still held bullish positions.

Two parties are holding over 60% of copper warrants on LME which totalled 89,900 tons on Thursday, exchange data showed.

Some positive signs were also seen in China's overall trade data which returned to growth in April after contracting the previous month.

In other metals, aluminium edged down 0.3% to $2,540.50, tin advanced 0.3% to $32,100 and nickel was down 0.6% at $18,780. LME zinc eased 0.5% to $2,890.50 per ton while lead dipped 0.6% to $2,216.

(Reporting by Julian Luk in London; editing by Jason Neely)