Gold price drops as Warsh warns Fed still has ‘work to do’ on inflation

Gold tumbled on Friday, giving up more than 3% at one point, after Federal Reserve chairman Kevin Warsh used his Jackson Hole debut to warn that inflation is not slowing significantly, and that unless policymakers become confident it is, the central bank has “work to do.”

Comex gold for December delivery fell as much as 3.2% to $4,515.30 an ounce in New York, a swing of $173 from the overnight high of $4,688. By early afternoon the most active contract was trading at $4,535.90, down 2.7% on the day and heading for its worst session in six weeks.

In his first major address since taking over the central bank in May, Warsh told the Kansas City Fed’s symposium that the 2% inflation goal is a “firm and fixed” target and that short-term interest rates remain “the predominant tool” for achieving the Fed’s mandate. The dollar pushed higher on the remarks, which traders read as keeping a September rate hike in play. Markets went into the speech pricing roughly one-in-three odds of an increase next month. Higher rates are typically negative for bullion, which pays no interest.

Warsh also appeared to push back against the US Treasury’s surprise intervention in the bond market, the buyback expansion that revived the debasement trade and helped power gold’s August rally. “Unconventional policies to spur economic activity may suit genuine crises but should otherwise be used sparingly, if at all,” he said.

The pullback comes in the final days of a monster month. Bullion-backed ETFs last week added the most gold since January, the December contract traded above $4,700 overnight earlier this week, its strongest since mid-May, and even after Friday’s slide gold is on course to finish August up about 11%, its best month since January. It still trades roughly 16% below the record set in late January.

Silver takes the harder hit

Comex silver for December delivery, now the most active contract, dropped 4.1% to $67.34 an ounce, wiping out a week of gains and leaving the metal 45% below January’s record. An ounce of gold buys about 67 ounces of silver, little changed from the end of July. Even so, silver is on track for a 16% August advance and its 71% gain over the past 12 months remains the best of any precious metal.

Miners’ monster month

Precious metals equities fell harder than the metal on Friday, with Coeur Mining down 5.7%, Eldorado Gold 5.3%, Hecla Mining 5.3%, AngloGold Ashanti 4.6% and Equinox Gold 4.6%, but the month has been historic.

Eldorado Gold has led the pack with a 51% gain since the end of July, as the company began crushing first ore at its Skouries project in Greece ahead of output later this quarter. Hecla Mining is up 44%, Equinox Gold 43%, AngloGold Ashanti 42%, Gold Fields 42% and Coeur Mining 40%. Agnico Eagle, which went into the month having reported record quarterly free cash flow of more than $1.3 billion and kept its 2026 guidance despite losing 370,000 ounces to a pit wall failure at Canadian Malartic, has gained 41%.

Newmont, up 36% in August, and Barrick Mining, up 24%, settled their long-running Nevada dispute during the month, with Newmont paying its partner $1.95 billion in a deal that folds Fourmile into their joint venture and clears the way for Barrick’s planned initial public offering of its North American gold assets by year-end.

Gold enters September up about 4% in 2026, still the laggard next to its own miners.

(With files from Bloomberg)