Silver Price Forecast: XAG/USD breaks below $41.50 as Fed cut bets wane

• Silver price declines as strong US inflation outlook limits odds for aggressive Fed rate cuts.
• Fed Chair Jerome Powell highlighted increasing signs of labor market weakness amid concerns about inflation driven by tariffs.
• The Bank of England and the Bank of Japan are expected to keep the policy rate unchanged this week.

Silver price (XAG/USD) extends its losing streak for the third successive session, trading around $41.30 during the Asian hours on Thursday. The non-interest-nearing Silver loses ground amid a strong inflation outlook that has curbed expectations of more aggressive Federal Reserve (Fed) rate cuts. The Federal Open Market Committee's (FOMC) projection showed that policymakers see inflation ending this year at 3% at the median, well above the central bank's 2% target.

The Federal Reserve (Fed) delivered a 25-basis-point rate cut on Wednesday and indicated a further 50 bps of easing before year-end, slightly above its June projections. Moreover, the Bank of Canada (BoC) also cut its policy rate by 25 bps, while the Bank of England (BoE) and Bank of Japan (BoJ) are expected to maintain steady policy this week.

Fed Chair Jerome Powell pointed to growing signs of weakness in the labor market to explain why officials decided it was time to cut rates after holding them steady since December amid concerns over tariff-driven inflation.

However, the downside of the Silver could be restrained by strong industrial demand from solar, electric vehicles, and electronics, as well as ongoing supply constraints. India's silver imports are also expected to gain momentum in the coming months, supported by firm investment and industrial demand that has already absorbed the surplus from last year's elevated shipments, according to industry officials cited by Reuters.