Silver Price Forecast: XAG/USD rises to near $27.00 due to rising odds of a Fed rate cut

• Silver prices appreciate as traders price in a deeper rate cut by the Fed in September.
• CME FedWatch tool indicates 72.0% odds of a 50-basis point Fed rate cut in September, up from 11.8% last week.
• Escalated Middle East tensions support safe-haven demand for precious metals like Silver.

Silver price (XAG/USD) halts its three-day losing streak, trading around $26.80 per troy ounce during the European session on Thursday. The prices of non-yielding assets like Silver gain ground due to the rising expectations of a US Federal Reserve (Fed) rate cut in September.

The Fed is highly expected to implement a more aggressive rate cut beginning in September, following weaker employment data from July that has heightened concerns about a potential US recession. According to the CME FedWatch tool, there is now a 72.0% probability of a 50-basis point (bps) interest rate cut by the US Federal Reserve (Fed) in September, up from 11.8% a week earlier.

Additionally, safe-haven demand for precious metals like Silver has increased due to escalating geopolitical tensions in the Middle East. CNN reported two US intelligence officials, saying that Iran and its allies are preparing for potential retaliation against Israel in response to the recent killings of a top military commander of Iran’s Hezbollah in Lebanon and a senior Hamas leader in Tehran.

Last week’s disappointing GDP figures and an unexpected rate cut by the People's Bank of China (PBOC) have added further selling pressure on Silver. Given that Silver is essential for numerous industrial applications, especially in China, the world's largest manufacturing hub, these developments have intensified concerns about demand. Traders shift their focus to Consumer Price Index data scheduled for release on Friday, to gain further impetus on the Chinese economy.