Silver Price Forecast: XAG/USD gains further to near $37.50 as Fed rate cut in September looks likely

• Silver price demonstrates strength amid accelerating bets supporting Fed's interest rate cuts in September.
• Cooling US labor demand has prompted Fed dovish bets.
• Investors await the US Services PMI data for July.

Silver price (XAG/USD) extends its recovery move to near $37.50 during the European trading session on Tuesday. The white metal strengthens as traders have raised bets supporting interest rate cuts by the Federal Reserve (Fed) in the September meeting.

According to the CME FedWatch tool, the probability of the Fed to cut interest rates in the September meeting has increased to 92.2% from 80% seen on Friday, after the release of the United States (US) Nonfarm Payrolls (NFP) data for July, and 41.2% on Thursday.

Theoretically, lower interest rates by the Fed bode well for non-yielding assets, such as Silver.

The US NFP report showed signs of weak labor demand at the time when the global economy is grappling with trade uncertainty due to the introduction of new tariff policy by US President Donald Trump.

The data was in contradiction to Fed Chair Jerome Powell's commentary that the labor market is broadly stable in the press conference, following the interest rate decision on Wednesday.

Meanwhile, the US Dollar (USD) trades broadly stable ahead of the US revised S&P Global and the ISM Services PMI data for July, which will be published during the North American session. The ISM Services PMI is seen at 51.5, higher from 50.8 in June.

Silver technical analysis

Silver price extends two-day recovery to near the 20-day Exponential Moving Average (EMA) around $37.50 on Tuesday.

The 14-day Relative Strength Index (RSI) oscillates around 50.00, suggesting that the asset lacks momentum.

Looking down, the June 24 low of $35.28 will act as key support for the major. On the upside, the June 30 high near $38.25 will be a critical hurdle for the pair.

Silver daily chart