Silver prices (XAG/USD) rebounded by 1% to near $67.00 during Monday’s European session after opening weakly at $65.67, following a significant sell-off on Friday. This recovery comes as investors shift their attention to the upcoming US Nonfarm Payrolls (NFP) data for August, which is expected to influence Federal Reserve policy expectations. The previous July NFP report, which showed a loss of 23,000 jobs, had already led to a downward revision in hawkish Fed expectations [1].
Both silver and gold markets reacted to Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole Symposium, where he reiterated the Fed’s commitment to bringing inflation down to its 2% target. Warsh’s remarks, described by Rabobank analysts as an important shift in communication, signaled dissatisfaction with recent inflation trends and openness to further rate hikes unless underlying inflation improves convincingly. Warsh stated, “we must be convinced that underlying inflation is moving toward our target clearly and at a sufficient pace. Otherwise, we still have work to do” [1]. ING’s commodities team echoed this, noting that Warsh’s comments reinforced a higher-for-longer rates narrative, supporting the US dollar and capping upside for non-yielding assets like gold [2].
Geopolitical tensions also played a role in market dynamics. Over the weekend, the US and Iran exchanged strikes for the first time in over a month, with Iran launching a missile-and-drone attack on US air bases in Jordan in response to an American airstrike on Iranian rocket launchers. Rabobank strategists highlighted this escalation as a reminder of the persistent risk of geopolitical shocks, which could complicate the inflation and policy outlook [1]. Higher oil prices stemming from these tensions added further pressure to silver prices in the opening session [1].
Technically, silver is trading at $66.93, above its 20-day Exponential Moving Average (EMA) of $65.65, indicating a constructive near-term bias. The Relative Strength Index (RSI) at around 56 suggests moderately positive momentum without overbought conditions [1]. For gold, ING analysts suggest that while central bank buying and ongoing geopolitical risks may provide some support, the stronger dollar and expectations for prolonged higher rates are likely to limit near-term upside. Gold is expected to remain sensitive to upcoming US inflation and labor market data [2].
CONCLUSION
Federal Reserve Chair Kevin Warsh’s hawkish tone at Jackson Hole has reinforced expectations for higher-for-longer US interest rates, pressuring both silver and gold prices. While geopolitical tensions and central bank buying may offer some support, the prevailing rate outlook and dollar strength are likely to cap further gains in precious metals in the near term.