Silver Price Forecast: XAG/USD rises to near $29.00 due to dovish Fedspeak

• Silver price appreciates as dovish Fedspeak increases the likelihood of an aggressive rate cut by the Fed in September.
• CME FedWatch Tool showed the likelihood of a 50 basis points rate cut has risen to 41.0%.
• The safe-haven Silver may face challenges as Middle-East tensions ease, following the withdrawal of Israeli forces from Jenin.

Silver price (XAG/USD) extends gains for the third successive day, trading around $28.90 per troy ounce during the early European hours on Friday.

The non-yielding assets like Silver may find support from the dovish comments made by Federal Reserve (Fed) officials, which enhance the chances of an aggressive rate cut by the Fed in September. Lower interest rates could make the commodity assets attractive for investors for better returns.

Chicago Fed President Austan Goolsbee said on Friday that the longer-run trend of the labor market and inflation data justify the Fed easing interest-rate policy soon and then steadily over the next year. 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 Goolsbee's words as neutral with a score of 3.8.

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 30.0% a week ago.

The potential gains for Silver might be limited due to safe-haven flows, given the recent easing of geopolitical tensions in the Middle East. Israeli forces have withdrawn from Jenin and a nearby refugee camp after 10 days of intense conflict, according to Reuters citing the Palestine news agency WAFA.

The Palestinian health ministry reported 21 fatalities in the city and camp. A Reuters observer noted that the departing Israeli forces left behind significant damage to infrastructure.