Warsh Breaks His Silence at Jackson Hole — Gold Gives Back the Month's Gains

Jimmy Wong

Fed Chair Kevin Warsh finally said what he really thinks about the economy on Friday — and gold didn't like it. Spot gold fell about 3% during the day, dropping from a high above US$4,650 to close near US$4,456/oz. Silver fell even harder, down 3.6% to US$66.76.

Nobody knew what to expect. Warsh has run the Fed since May and barely said a word about how he actually sees the economy — his post-meeting statements have been unusually short, and he's the first Fed Chair in over a decade to skip giving his own rate forecast. So Friday's speech was the real first look at what he thinks. He didn't hold back: inflation "isn't meaningfully slowing," he said, and the Fed still has work to do. The sharpest line was him saying the Fed itself is to blame for five-plus years of high inflation — "and that is where it belongs" — an unusually blunt thing for a sitting Fed Chair to admit.

Bond yields moved in two different directions, and that's the part worth understanding. Short-term yields (the 2-year) rose to 4.30%, since traders now think a rate hike is more likely. But long-term yields (the 30-year) actually dipped slightly, to 5.17%. That's the part of the bond market Treasury has been trying to prop up with its buyback program — and the fact it held steady even after a hawkish speech suggests that support is still working.

Warsh also said the Fed needs "unfiltered" market signals, including Treasury bond prices, to do its job properly. He never named Treasury Secretary Scott Bessent, but the message was clear: stop interfering with the bond market. That's about as close as a sitting Fed Chair gets to publicly pushing back on a government colleague. The bigger picture: this was the first real signal from Warsh since taking the job, and it leaned hawkish — worth remembering as a reason higher-for-longer rates could keep weighing on gold, beyond just this one week's price move.

Zoom out and August is still a strong month for metals overall. Even after Friday's drop, gold's up roughly 13% for the month and silver's up in the mid-teens percent — one of the best months either metal has had in years. Copper hit a fresh record near US$6.77/lb and uranium climbed to US$89.55/lb too, so this rally hasn't been a gold story alone.

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