Silver Price Forecast: XAG/USD rises to near $28.50 amid rising bets of Fed rate cuts

• Silver price extends its upside as recent data increase the odds of aggressive rate cuts by the Fed.
• CME FedWatch Tool shows the bets of a 50 basis points rate cut have risen to 41.0%.
• Atlanta Fed President Raphael Bostic emphasizes that the Fed must not maintain a restrictive policy stance for too long.

Silver price (XAG/USD) continues to gain ground for the second successive session, trading around $28.40 per troy ounce during Thursday’s European hours. The non-yielding assets like Silver could advance further as weak US manufacturing and labor market data spurred bets that the Federal Reserve will cut interest rates more aggressively to avert an economic downturn.

July's US JOLTS Job Openings came in below expectations, signaling a further slowdown in the labor market. Additionally, the ISM Manufacturing PMI showed that factory activity contracted for the fifth straight month.

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

Traders now await US ISM Services PMI and Initial Jobless Claims scheduled to be released on Thursday. Attention will shift to Friday’s US Nonfarm Payrolls (NFP) to gain more cues on the potential size of an expected rate cut by the Fed this month.

Atlanta Federal Reserve President Raphael Bostic said on Wednesday that the Fed is in a favorable position but added that they must not maintain a restrictive policy stance for too long, per Reuters. FXStreet’s FedTracker, which gauges 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.