Silver (XAG/USD) prices were trading 0.5% higher around $32.00 during North American trading hours on Tuesday (04/03). The white metal showed strength as the trade war between the United States (US) and other North American countries, as well as China, has escalated.

Canada, Mexico, and China have all hinted at retaliatory tariffs on US imports. On Monday, US President Donald Trump confirmed that tariffs of 25% on Canada and Mexico, and 10% on China would go into effect on Tuesday.

Earlier in the day, Canadian Prime Minister Justin Trudeau said that Canada would impose "retaliatory tariffs on US imports" starting Tuesday "if US tariffs go into effect." The Chinese economy has also announced tariffs on a number of US agricultural imports. In the North American session on Tuesday, Mexican President Claudia Sheinbaum Pardo said that retaliatory tariffs would go into effect on Sunday because "Trump started a global trade war." The scenario of rising geopolitical tensions has increased the appeal of precious metals as a safe haven, such as Silver. Meanwhile, the decline in bond yields and the US Dollar (USD) has also strengthened the Silver prices. The 10-year US Treasury yield fell to nearly 4.14%. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, fell to nearly 106.00. The US Treasury yields and the US Dollar have faced selling pressure as traders have increased bets in favor of the Federal Reserve (Fed) cutting interest rates at its June policy meeting. According to the CME FedWatch tool, the probability of the central bank cutting interest rates in June has increased to 87% from 71% recorded a week ago. (Newsmaker23)

Source: FXstreet