Silver Gains 5% As Traders Prepare For A Shift In China’s COVID Policy

Key Insights

• Traders expect that China will relax its zero-COVID policy. 
• These expectations provided significant support to commodity markets today. 
• Silver, platinum, palladium and copper rallied, as they are sensitive to industrial demand. 

Silver Tests Resistance At $20.50

Silver rallied above the $20.00 level amid a broad rebound in commodity markets, which was triggered by rumors about China’s plans to relax its zero-COVID policy.

Currently, silver is trying to settle above the resistance at $20.50. RSI remains in the moderate territory, so there is plenty of room to gain additional upside momentum in case the right catalysts emerge. If silver settles above $20.50, it will get to the test of the next resistance level at $20.80. A move above $20.80 will open the way to the test of the resistance at $21.25.

On the support side, a move below the $20.50 level will push silver back towards the support at $20.20. In case silver declines below $20.20, it will head towards the next support level at $20.00.

Platinum and palladium, which are also sensitive to industrial demand, have also gained strong upside momentum today. Platinum settled above the $950 level, while palladium moved towards $1850. Meanwhile, gold managed to get above the resistance at $1660 and tested the next resistance level at $1675.

WTI Oil Settled Above The $90 Level

WTI oil has recently tested resistance at $92.50 on hopes that China’s demand will increase after the country eases its coronavirus-related measures.

If China relaxes its zero-COVID policy, demand for oil will grow at a time when G7 countries plan to impose a price cap on Russian oil.

A combination of higher demand and lower supply (assuming that Russian oil exports decline after December 5, 2022) may push oil prices closer to the $100 level.

Natural Gas Continues To Trade Near $6.00

Natural gas moved back above the $6.00 level as traders reacted to the broad rebound in commodity markets.

Natural gas prices have moved back and forth around the $6.00 level this week, and it looks that the market will need more catalysts to get out of the recent trading range.

Traders should note that Freeport LNG is expected to restart operations in late November, so prices may get some support in the upcoming weeks as the market will prepare for an increase in exports.

Copper Tests Multi-Week Highs

Copper gained 7% in today’s trading session as China is the main consumer of copper.

If the Chinese economy starts to grow at a faster pace, demand for copper will increase.

The nearest significant resistance level for copper is located at $3.70. A move above this level will show that copper markets are ready to start a new trend.

For a look at all of today’s economic events, check out our economic calendar.