Silver Price Forecast: XAG/USD struggles around $32.40 while global trade war intensifies

NEW YORK (March 3) Silver price (XAG/USD) struggles to extend its upside above the key resistance of $32.40 in Wednesday’s North American session. The white metal remains broadly firm as United States (US) President Donald Trump-led-global trade war has intensified due to counter-tariffs on China, Canada, and Mexico.

Escalating trade war tensions have increased uncertainty over the global economic outlook. Such a scenario improves the appeal of precious metals such as Silver.

Meanwhile, a sharp sell-off in the US Dollar (USD) is also a favorable scenario for the Silver price. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, plunges to near 104.50, the lowest level seen in almost four months. The Greenback weakens as investors worry about the US economic outlook due to escalating tariff war.

During North American trading hours on Wednesday, weak US ADP Employment Change data for February has also weighed on the US Dollar. The ADP reported that private employers added 77K fresh workers, lower than estimates of 140K and the former release of 186K. Soft labor demand in the US private sector is expected to prompt Fed dovish bets, which had already increased lately.

According to the CME FedWatch tool, the likelihood for the Fed to reduce interest rates in June has increased to 85% from 70% recorded a week ago.

Silver technical analysis

Silver price moves higher to near the key resistance of $32.40 plotted from the December 12 high. The asset climbs above the 20-day Exponential Moving Average (EMA), which trades around $31.85.

The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a sideways trend.

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.

FXStreet