Silver rises amid rising bets of Fed rate cuts

The price of silver (XAGUSD) continues to gain ground for the second successive session, trading around $28.40 per troy ounce in Thursday’s European markets.

The non-yielding assets like silver could advance further as weak US manufacturing and labour 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 labour 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 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 the US ISM Services PMI and Initial Jobless Claims later Thursday, while 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 favourable 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.

(Source: OANDA)