Warsh puts inflation first and gold loses 3% in a single session

Gold closed on Friday 28 August at 4,456 dollars per troy ounce, a loss of 139.40 dollars or 3.14% in a single trading session. Silver fell even harder, shedding 4.24% to 66.21 dollars. The trigger was Kevin Warsh’s very first speech as chair of the American central bank, at the Jackson Hole economic symposium. Investors read one clear message into it. Inflation takes priority over the labour market, and a September rate hike is a realistic scenario once more.

minus 3.14%loss for gold in a single trading session, worth 139.40 dollars per troy ounce

What Warsh actually said at Jackson Hole

In his keynote titled In Our Time, Warsh pointed to figures that in his view are not yet heading the right way. The PCE index, the inflation gauge the central bank itself watches most closely, stands at 3.7% over twelve months and at 4.1% over six months. The shorter figure is therefore the higher one, a sign that price pressure recently built rather than eased.

We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.

Kevin Warsh, chair of the Federal Reserve, in his keynote In Our Time at the Jackson Hole symposium of 28 August 2026

On the labour market he sounded considerably more relaxed. He described it as stable and consistent with full employment. It was exactly that combination, worry about prices and calm about jobs, that made the speech hawkish in the eyes of the market. According to CME FedWatch rate expectations, the chance of a September hike jumped from roughly 36% before the speech to roughly 57% afterwards. The dollar index gained half a percent and the yield on ten year American government debt held around 4.7%.

Why higher interest rates weigh on the price of gold

Gold and silver pay no interest or dividend of their own. When the return on alternatives such as American government debt rises, holding precious metal becomes relatively more expensive. The dollar adds a second effect. Gold trades worldwide in dollars, so a stronger dollar makes the metal more expensive for buyers outside the United States and dampens demand. Both effects played out at once on Friday, which explains the size of the drop. Anyone following the current gold price saw the loss unfold within hours of the speech.

Silver falls harder than gold

The fact that silver dropped 4.24%, deeper than gold, is no coincidence. Silver is a smaller and thinner market, and beyond its role as an investment the metal has a substantial industrial component. In a sudden reversal of rate expectations silver therefore tends to swing more sharply, in both directions. Anyone looking to sell silver, whether cutlery, jewellery or coins, notices that the gap between a good and a poorer day is wider for silver than for gold.

August still ends firmly positive despite the blow

One bad session does not erase what came before it. Across the whole of August, gold is still up almost 10%. Barely three days earlier we reported that gold had gained more than 6% on a weekly basis and touched its highest level since May, precisely in anticipation of this speech. Measured over the past seven days gold is now down almost 3%, handing back most of that weekly gain. The all time record therefore remains a long way off. It has stood since late January 2026 at 5,589.38 dollars per troy ounce.

What this pullback means for anyone looking to sell old gold

For anyone looking to sell old gold, think of jewellery that has not been worn for years, dental gold or loose coins, a single trading session changes little about the heart of the matter. The value of your items depends on weight, purity and the price at the moment of the valuation itself. That price is lower today than it was on Thursday, but still considerably higher than at the start of this month.

The main point is this. Do not try to time the market on the strength of one speech. Warsh said literally that he was committing to a discipline and not to a decision, which means the central bank itself is also simply waiting for the next set of figures. Anyone who wants to know what their items are worth right now can have the purity and weight checked easily through the gold check, regardless of when you finally decide to sell.

A valuation follows the price on the day itself

A drop of 3% sounds steep, but at a valuation only the price at the moment of the appointment counts. That way you can be certain you receive the current value of your gold or silver, whatever the price did in the days before.

Frequently asked questions

Why does the gold price move so sharply on a speech by the Fed chair? –

The Federal Reserve is the American central bank and sets interest rates in the world's largest economy. Investors try to price those rates in months ahead of time. If the chair says something that differs from what the market expected, that expectation is recalculated within minutes. Because gold itself pays no interest, its appeal relative to interest bearing alternatives such as government bonds changes immediately. On Friday the priced in chance of a September rate hike jumped from roughly 36% to roughly 57%, and that translated straight into a lower gold price.

What is the PCE index and why does the six month figure matter? +

The PCE index measures how much the prices of the goods and services American households actually buy have risen. It is the inflation gauge the central bank itself prefers over the better known consumer price index. Warsh cited two figures: 3.7% over the past twelve months and 4.1% over the past six months. The fact that the shorter period shows the higher number means price pressure recently sped up rather than eased. A central bank looks at precisely that gap to judge whether its policy is doing enough.

What do market commentators mean by a hawkish tone? +

Hawkish means a central banker sounds mainly worried about inflation and appears willing to keep rates high, or even raise them, to fight it. The opposite is called dovish, which puts more weight on growth and employment and therefore implies a greater chance of rate cuts. Warsh sounded hawkish on Friday because he called the labour market healthy and the price numbers concerning. For gold, a hawkish tone is generally bad news in the short term.

Why did silver fall harder than gold? +

Silver is a far smaller market than gold, so the same wave of selling produces a larger price effect. On top of that, roughly half of all silver is consumed by industry, in solar panels, electronics and medical applications. Silver therefore responds both to rate expectations and to the industrial outlook. That double sensitivity makes it move more violently than gold in either direction, which showed again on Friday with a loss of 4.24% against 3.14% for gold.

After this drop, is gold low compared with earlier this year? +

No. Despite Friday's loss, gold is still up almost 10% over the month of August as a whole. The all time record dates from late January 2026, when the price reached 5,589.38 dollars per troy ounce during a peak in tensions with Iran. The current level of 4,456 dollars sits clearly below that, but well above where the price stood at the start of August. When selling, always compare with the most recent price rather than with a peak or trough from months ago.

Warsh puts inflation first,gold loses 3%