Silver Price Forecast: XAG/USD rises toward $30.00 as Fed may deliver a jumbo rate cut

• Silver price advances as recent US data reinforced the likelihood of a 50 basis points rate cut by the Fed.
• CME FedWatch Tool indicates the likelihood of a 50 basis points rate cut increasing to 41.0%, from 14.0% a day ago.
• Markets assess demand prospects in China while factoring the renewable energy growth, which is crucial for Silver demand.

Silver price (XAG/USD) continues its winning streak that began on September 9, trading around $29.90 per troy ounce during the Asian hours on Friday. The non-yielding assets like Silver received support after economic data from the United States (US) reinforced the possibility that the Federal Reserve (Fed) could lower interest rates by 50 basis points next week. Lower interest rates make non-yielding assets more attractive for investment returns.

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 sharply increased to 41.0%, up from 14.0% a day ago.

The US Producer Price Index (PPI) rose to 0.2% month-on-month in August, exceeding the forecasted 0.1% increase and the previous 0.0%. Meanwhile, core PPI accelerated to 0.3% MoM, against the expected 0.2% rise and July’s 0.2% contraction. However, US Initial Jobless Claims rose slightly higher for the week ended September 6, increasing to the expected 230K from the prior 228K reading.

On Thursday, the European Central Bank (ECB) lowered the Main Refinancing Operations Rate to 4.0% by implementing a 25 basis-point rate cut. Additionally, the UK GDP showed no growth in July, following a stagnation in June, which reinforces expectations of a possible quarter-point rate cut by the Bank of England (BoE) in November. Some traders are also pricing in the possibility of an additional rate cut in December.

Markets are assessing demand prospects in China, the world's largest consumer, following mixed economic signals, while also considering the growth of the renewable energy sector, where Silver plays a key role in solar panel production.