Silver price (XAG/USD) surges almost 2% to near $30.40 during European trading hours on Wednesday. The white metal strengthens as the US Dollar (USD) tumbles amid fears that the escalating trade war between Washington and Beijing could lead the United States (US) economy into a recession.
The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, plummets to near 102.00.
Financial market participants are concerned that the imposition of 104% duty on imports from China by President Donald Trump for pouring drugs into the US and its retaliation against reciprocal tariffs would restrict the purchase of Chinese goods by US firms.
Such a scenario will be inflationary and slow down the US economic growth as domestic firms lack near substitutes of Chinese imports.
Meanwhile, traders have raised Federal Reserve (Fed) dovish bets in the face of potential US economic shocks.
The probability for the Fed to cut interest rates in the May meeting has increased significantly to 52.5% from 10.6% seen a week ago, according to the CME FedWatch tool. Lower interest rates by the Fed bodes well for non-yielding assets, such as Silver.
In Wednesday's session, investors will focus on the Federal Open Market Committee (FOMC) minutes of the March policy meeting, which will be published at 18:00 GMT.
Source: FXStreet
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