Silver (XAG/USD) prices struggled to extend gains above the key resistance of $32.40 during the North American session on Wednesday (05/03). The white metal held firm as the global trade war led by the United States (US) President Donald Trump has escalated due to retaliatory tariffs on China, Canada, and Mexico.

The escalating trade war tensions have raised uncertainty over the global economic outlook. Such a scenario increases the appeal of precious metals like Silver.

Meanwhile, a sharp sell-off in the US Dollar (USD) is also a favorable scenario for Silver prices. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, plunged to near 104.50, the lowest level seen in almost four months. The Greenback weakened as investors were concerned about the US economic outlook due to the escalating tariff war.

During the North American trading hours on Wednesday, weak US ADP Employment Change data for February also weighed on the US Dollar. ADP reported that private employers added 77,000 new workers, lower than the 140,000 estimate and the previous release of 186,000. Weak labor demand in the U.S. private sector is expected to boost dovish Fed bets, which have been rising of late.

The probability of the Fed cutting rates in June has risen to 85% from 70% a week ago, according to the CME FedWatch tool. (Newsmaker23)

Source: FXstreet