Silver Price Forecast: XAG/USD slips toward $38.00 as Fed rate cut odds ease

• Silver price weakens ahead of Fed Chair Jerome Powell's speech at the Jackson Hole Symposium.
• CME FedWatch Tool indicates that markets are pricing a 74% chance of a September rate cut, against 82% on Wednesday.
• The preliminary S&P Global US Composite PMI inched higher to 55.4 in August, from 55.1 prior.

Silver price (XAG/USD) edges lower after registering gains in the previous session, trading around $38.10 per troy ounce during the Asian hours on Friday. Traders adopt caution ahead of the Federal Reserve (Fed) Chair Jerome Powell's speech at the Jackson Hole Symposium in Wyoming, which could offer fresh clues on the September policy outlook.

The non-yielding Silver comes under pressure as the potential for higher opportunity costs weighs on sentiment. Strong PMI data alongside an uptick in jobless claims highlight the Fed's dilemma of managing persistent inflation while confronting a softening labor market. According to the CME FedWatch tool, Fed funds futures traders are now pricing in a 75% chance of a rate reduction in September, down from 82% on Wednesday.

The preliminary S&P Global US Composite PMI inched higher to 55.4 in August, from 55.1 prior. Meanwhile, the US Manufacturing PMI rose to 53.3 from 49.8 prior, surpassing the market consensus of 49.5. Services PMI eased to 55.4 from 55.7 previous reading, but was stronger than the 54.2 expected. Moreover, US Initial Jobless Claims rose to 235K for the previous week, an eight-week high and above the consensus estimate of 225K, suggesting some softening in labor market conditions.

Chicago Fed President Austan Goolsbee said on Thursday that September's Fed meeting remains open for action. Goolsbee further stated that the Federal Reserve has been receiving mixed signals on the economy. Boston Fed President Susan Collins signaled openness to a rate cut as soon as September, citing tariff headwinds and potential labor market softness, even as near-term inflation risks persist.