Silver Price Forecast: XAG/USD shows strength near $32 as global trade war escalates

• Silver price jumps to near $32.00 as the global trade war has intensified.
• China, Mexico, and China have announced retaliatory tariffs for the US.
• Fed dovish bets have weighed on the US Dollar and bond yields.

Silver price (XAG/USD) trades 0.5% higher around $32.00 in North American trading hours on Tuesday. The white metal exhibits strength as the trade war between the United States (US) and its North American peers, and China has intensified.

Canada, Mexico, and China have signaled retaliatory tariffs on imports from the US. On Monday, US President Donald Trump confirmed that 25% tariffs on Canada and Mexico, and 10% on China would come into effect from Tuesday.

Earlier in the day, Canadian Prime Minister Justin Trudeau said that Canada will impose "retaliatory tariffs on US imports" from Tuesday "if US tariffs go into effect". The Chinese economy also announced tariffs on a slew of agricultural imports from the US. In the North American session on Tuesday, Mexican President Claudia Sheinbaum Pardo said that retaliatory tariffs are coming on Sunday as "Trump starts a global trade fight". 

The scenario of heightened geopolitical tensions increases the safe-haven appeal of precious metals, such as Silver.

Meanwhile, sliding bond yields and the US Dollar (USD) have also strengthened the Silver price. 10-year US Treasury yields tumble to near 4.14%. The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, slumps to near 106.00. US bond yields and the US Dollar have faced selling pressure as traders have raised bets supporting the Federal Reserve (Fed) to cut interest rates in the June policy meeting.

According to the CME FedWatch tool, the probability for the central bank to cut interest rates in June has increased to 87% from 71% recorded a week ago.

Silver technical analysis

Silver price moves higher but struggles to extend its upside above the 20-day Exponential Moving Average (EMA), which trades around $31.80.

The 14-day Relative Strength Index (RSI) falls inside the 40.00-60.00 range, suggesting that the bullish momentum has been faded. However, the bullish bias remains intact.

Looking down, the upward-sloping trendline from the August 8 low of $26.45 will act as key support for the Silver price around $30.00. While, the February 14 high of $33.40 will be the key barrier.

Silver daily chart