Silver Price Forecast: XAG/USD rises near $28.50 amid growing Fed rate cut bets

• Silver prices extend their gains as recent data increases the likelihood of aggressive rate cuts by the Fed.
• The CME FedWatch tool shows that bets on a 50 basis point rate cut have risen to 41.0%.
• Atlanta Fed President Raphael Bostic stresses that the Fed should not maintain a restrictive policy for too long.

Silver (XAG/USD) continues to gain ground for the second consecutive session, trading around $28.40 per troy ounce during European hours on Thursday. Non-yielding assets like silver could advance further as weak US manufacturing and labor market data boosted bets that the Federal Reserve will cut interest rates more aggressively to avoid an economic downturn.

US JOLTS job openings for July came in below expectations, signaling a further slowdown in the labor market. In addition, the ISM manufacturing PMI showed that factory activity contracted for a fifth consecutive month.

According to the CME FedWatch tool, markets are fully anticipating at least a 25 basis point (bp) rate cut by the Federal Reserve at its September meeting. The probability of a 50 bp rate cut has risen to 41.0%, up from 34.0% a week ago.

Traders now await ISM services PMI data and US initial jobless claims scheduled for release on Thursday. Focus will turn to US non-farm payrolls (NFP) on Friday for further clues on the potential size of an expected Fed rate cut this month.

Atlanta Federal Reserve President Raphael Bostic said on Wednesday that the Fed is in a favorable position but added that they should not keep policy tight for too long, according to Reuters. FXStreet’s FedTracker, which measures the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Bostic’s words as neutral with a score of 4.6.