Commodities Watch: What’s in it for silver and copper prices

What’s driving silver’s rally year-to-date

Silver prices have surged by as much as 18% since the start of the year. In addition to the tailwind offered by a weaker US dollar, market apprehension about impending trade measures under the Trump administration have prompted traders to hedge against potential import costs. This has fuelled some short covering and led to an increase in silver deliveries to Chicago Mercantile Exchange (CME) warehouses since late 2024. The economic and geopolitical uncertainties have also contributed to some safe-haven demand for both silver and gold, though silver remains less favoured in this regard due to its higher economic sensitivity.

Improving sentiments around China’s economy may have contributed to silver’s gains as well, with authorities’ reassurances of policy support helping to overshadow areas of economic weakness. In terms of outlook, the Silver Institute projects another significant market deficit in 2025, marking the fifth consecutive year of supply shortfalls. As in previous years, industrial demand will be the primary driver of this tight supply-demand balance, with volumes expected to reach a new record high.

Looking ahead, market participants will be focusing on the impact of upcoming US tariffs on global economic growth, particularly in China. While market participants have pared back their expectations of a US recession lately on Trump’s softer tariff rhetoric, there is still room for surprises, with any risks of trade escalation potentially dampening investors’ enthusiasm for silver as an industrial metal.

Silver prices’ technicals: Rising channel in place

Technically, silver prices continue to trade in an upward trend, with a rising channel pattern guiding its moves since the start of the year. Its daily relative strength index (RSI) has also found some support off its midline, suggesting buyers in control. Resistance to watch may be at the US$34.87 level, where an upper channel trendline may coincide with its October 2024 high.

Copper prices back to retest October 2024 high

Similarly, benefiting from improved sentiments around China’s economy, copper prices have managed to clock in a 15.7% return year-to-date. Additionally, US President Donald Trump signed an executive order last month to investigate the nation’s copper imports, citing national security and economic stability concerns due to increasing reliance on foreign sources. This may drive some front-running activities ahead of upcoming tariff announcement, which may offer a boost to near-term demand.

Looking further ahead, optimism surrounding the global transition to net-zero emissions is expected to support copper demand, particularly in sectors like electric vehicles, solar, and wind power. However, immediate risks to watch are that prices remain vulnerable to any surprises or shocks from US tariffs, which may singlehandedly impact expectations around global growth outlook and weigh on the industrial metal.

Copper prices’ technicals: Retest of October 2024 high

Technically, a recent retest of its October 2024 high encountered some near-term resistance, but the broader upward trend is likely to persist, with a trend reversal characterised by higher highs and higher lows seemingly at play. An attractive buy opportunity may be presented with a reversion in its daily RSI back to its midline, which has seen prices forming the lows on the previous two occasions. In the event of further retracement, the US$9,689 per metric ton level may be on watch as a key support zone to set up a new higher low.