Silver prices have tumbled nearly 6% from last week's two-month high near $71/oz, currently trading near the $67/oz mark as precious metals face sustained pressure from hawkish Federal Reserve signals. According to The Financial Express, the white metal has retreated sharply from its previous session, driven by US Federal Reserve Chair Kevin Warsh's rather hawkish tone and a lift in crude oil prices. Warsh's recent address at the Jackson Hole Economic Symposium has increased the probability of a rate hike at the Fed's September meeting, as the policymaker said that the central bank will "have work to do" if inflation is not controlled towards its target of 2%. Although silver advanced around 16% in August, the precious metal is again under pressure as the white metal has tumbled nearly 6% from last week's two-month high near the $71/oz mark. The selloff tracked weakness in the underlying precious metals after Warsh reiterated at the Federal Reserve's annual Jackson Hole conference that policymakers remained committed to returning inflation to the central bank's 2% target.
The precious-metal decline came as markets are now pricing in a 60% chance of a rate hike at the Fed's September meeting, up from 30% before Warsh's remarks, according to the CME FedWatch tool. As per CNBC TV18, Gaurav Garg, head of research at Lemonn, said the hawkish Jackson Hole comments have increased expectations of a September rate hike, with markets pricing in a significantly higher probability of a rate increase. Higher US yields and a stronger dollar tend to put pressure on non-yielding assets such as gold and silver, making the metals less attractive to investors seeking returns. The sustained selloff came as US Federal Reserve Chair Kevin Warsh's comments raised expectations that interest rates may need to rise, with his remarks coming closer than before to acknowledging that rate hikes could be required to bring down price pressures. Warsh didn't signal his support for a hike explicitly; he warned inflation isn't meaningfully slowing and that policymakers must be confident it is. Otherwise, he said, they had "work to do." Warsh said on Friday at the Jackson Hole economic symposium: "Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That's our job," coming closer than he had previously to acknowledging that further rate hikes may be needed.
The precious-metal selloff was compounded by escalating tensions between the US and Iran, which pushed oil prices higher and increased bond yields. According to Zee News, the continued tensions between the US and Iran pushed oil prices higher and increased bond yields, with the Fed Reserve tends to keep interest rates high amid speculation of heightened inflation due to the oil price hike. The conflict at the Strait of Hormuz keeps the bullion volatile, as recent reports indicate the US attacked two rocket launchers on Larak Island in the Strait of Hormuz, while Iran claims to have struck US military bases in Jordan in response. Larak Island sits at a key location just offshore from Bandar Abbas port, which sits in proximity to the Strait of Hormuz, making the region strategically important for global oil flows. High Treasury yields make bullion less attractive since it generates no interest, adding to the pressure on precious metals as investors seek yield-bearing alternatives.
According to The Financial Express, Kaynat Chainwala, Assistant Vice President of Commodity Research at Kotak Securities, noted that the structural outlook for silver remains bullish, but over the shorter course of time it remains vulnerable to the Fed's policy stance. If the Fed delivers a hawkish tone, it will impact non-yielding assets first and surely affect the investment and ETF demand caused by rising yield expectations, so a pullback towards the $55-$57/oz is possible. However, she adds that this wouldn't affect silver's structural story, which remains supported by supply deficits and industrial demand. Jigar Trivedi, Senior Research Analyst at IndusInd Securities, noted that near-term price volatility is possible, and the white metal is expected to contract further, caused by the high possibility of a rate hike at the upcoming FOMC meeting. In international markets, the immediate support for spot silver sits at $65.5/oz, with deeper cushions at $63 and $61, while the immediate resistance level is seen at $68 and $70. On the domestic front, MCX support is layered at ₹2,32,500, ₹2,28,000 and ₹2,23,000, with resistance seen at ₹2,48,000, and MCX support at ₹2,30,000/kg, with resistance at ₹2,50,000/kg.
Despite the recent correction, market experts view the current decline as a consolidation phase rather than a structural downturn. According to Mint, Colin Shah, MD, Kama Jewelry, said the correction should be viewed as a phase of consolidation rather than necessarily signalling a structural downturn. The week kicked off with gold under pressure, witnessing a sharp correction of nearly 2% on the MCX, influenced by aggressive profit-taking and soft global cues. While short-term technical selling is dominating the current price trajectory, this pullback can be actually treated as a healthy consolidation rather than a structural downturn, Shah explained. The fall in domestic prices could provide opportunities for consumers as the festive season has already begun and the wedding buying season is approaching, with Shah adding that the correction could help consumers take advantage of the volatile price environment, while retailers may see it as an attractive opportunity to accelerate inventory restocking. Internationally, Shah said the easing in bullion prices offers marginal relief to manufacturers through lower input costs and could improve price competitiveness in key overseas markets such as the US and GCC, potentially providing a boost to steady pre-holiday order fulfilment. Chintan Haria, principal, investment strategy at ICICI Prudential, said investment demand has become a key source of growth in gold demand in 2026, pointing to continued purchases by central banks which bought 345 tonnes of gold in the first half of 2026, according to World Gold Council data.
