Fed's Warsh revives September rate-hike bets, gold and silver plunge

Updated: Aug 28, 2026 — 9:15 PM By: Kitco NewsWire

(Kitco NewsWire) — Spot gold and silver prices are sharply lower in late-afternoon U.S. trading Friday, after Fed Chair Kevin Warsh used his Jackson Hole speech to reinforce the central bank’s inflation fight, lifting short-end yields, firming the U.S. dollar and forcing a heavy unwind in precious metals.

At the time of writing, spot gold was trading near $4,456.00 an ounce, down 3.14%, while spot silver was trading at $66.210, down 4.24% on the session.

Equity Markets

North American equity markets closed lower, though the major indexes still posted weekly gains:

• S&P 500: Fell 0.2% to 7,711.76
• Dow Jones Industrial Average: Down less than 0.1% at 53,559.99
• Nasdaq Composite: Lost 0.5% to 26,402.42
• Russell 2000: Dropped 1.4% to 2,972.37

European markets finished higher:

• STOXX Europe 600: Up 0.51% to 655.16
• FTSE 100 (London): Up 0.29% to 10,824.26
• DAX (Germany): Up 0.77% to 26,569.99
• CAC 40 (France): Up 0.98% to 8,401.18
• FTSE MIB (Italy): Up 0.67% to 52,616.12

Fed Policy & Rate Expectations

The latest positioning shifted sharply toward a more hawkish Fed path after Warsh’s speech and the Labor Department’s payroll benchmark revision.

• Warsh said the Fed’s job is to deliver stable prices and signaled that persistent inflation remains the dominant risk.
• The preliminary benchmark revision showed March 2026 payrolls were overstated by 79,000 jobs — far smaller than the large downward adjustment some traders had feared.
• September hike odds jumped to 57.5% from 35.9%.
• The two-year Treasury yield rose 11.8 basis points to 4.348%.
• The dollar index gained 0.5% on the day.

For gold, the signal was clear: the labor-data revision did not deliver the dovish shock bulls needed, and Warsh’s tone pushed the opportunity cost of holding non-yielding metals back to the center of the trade.

Precious Metals Technical Breakdown

Precious metals were the clear casualty of the rate repricing.

Gold:

• Fell through its 200-day moving average at $4,526.24
• Slipped below the $4,481.78 bear-market threshold
• Tested its $4,504.07 to $4,458.52 retracement zone

Silver:

• The $70 breakout failed
• Slipped through $69.96, $69.50 and $67.69
• Stabilized above the $66.00 session low

The move leaves silver’s breakout structure damaged but not fully broken, while gold’s break below the 200-day average makes the next few sessions a test of whether the selloff is a Warsh-driven flush or the start of a broader technical reset.

Oil & Geopolitical Context

The Strait of Hormuz remains the main geopolitical channel into oil, inflation expectations and defensive demand, but Friday’s market impact came through easing supply fears rather than a fresh crude spike.

• Oil fell as traders assessed rumors of a possible shipping agreement through the strait and signs that more crude is moving despite the six-month U.S.-Israel war against Iran.
• Seven commodity vessels transited Hormuz Thursday, down from 17 a day earlier and below the 10-day average of 15.
• Front-month Brent settled at $89.31 a barrel; Nymex crude was near $83.18.

For gold, that left less geopolitical offset against the hawkish Fed shock: lower oil eased part of the inflation premium, but the unresolved Iran conflict and sanctions risk kept a defensive bid in place.

Kitco NewsWire articles were generated by Kitco's AI-assisted reporting workflow and reviewed by Kitco News editorial staff, with every claim independently verified before publication. Kitco labels all AI-assisted content as part of our commitment to editorial transparency. For questions or corrections, contact the Kitco News editorial team.