Federal Reserve Chair Kevin Warsh’s hawkish remarks at the Jackson Hole Symposium have renewed pressure on precious‑metal markets. Gold slipped below $4,500 per ounce, while silver retested support near the $66 level. Still, Simon‑Peter Massabni, Head of Business Development at XS.com, believes this volatility is more likely a cyclical correction triggered by interest‑rate expectation repricing rather than the end of the larger‑scale bull market for gold and silver.
Speaking to Kitco News, Massabni stated that after Warsh reaffirmed his commitment to price stability, markets rapidly reassessed the US interest‑rate path and even began pricing in the possibility of another September rate hike. According to him, the market‑implied probability of a September rate hike now stands close to 57%.
Hawkish Remarks Weigh on Precious Metals
In his speech last Friday, Warsh stressed that the Fed “has more work to do” if underlying inflation fails to fall toward the 2% target at an adequate pace. He noted that it is the Federal Reserve’s duty to ensure inflation steadily moves toward its objective; otherwise, policy must remain restrictive.
These comments pulled markets away from earlier expectations of looser monetary policy and reignited discussions that the Fed may hike rates again should inflation remain sticky. For gold and silver, this typically translates to heightened near‑term pressure, as rising real yields and a stronger US dollar tend to hurt non‑yielding assets.
Massabni pointed out that this should be interpreted primarily as a repricing of rate expectations instead of a complete reversal of the fundamental backdrop supporting precious‑metal gains. He emphASIzed that core drivers that lifted gold and silver remain intact; markets are merely recalibrating the Federal Reserve’s policy trajectory.
Long‑Term Support Remains for Gold
In his view, higher interest rates, rising US Treasury yields and a stronger dollar will indeed suppress gold prices in the short run. Nevertheless, expanding US debt levels, fiscal‑sustainability worries, geopolitical uncertainty and broader economic risks continue to offer long‑run support for gold.
Massabni highlighted a potential dilemma facing the Federal Reserve: on one hand, restrictive policy is required to contain inflation; on the other hand, rising government borrowing costs keep squeezing already‑stressed fiscal conditions. This, he argues, means higher Treasury yields cannot simply be viewed as a long‑term negative for gold.
“What we are witnessing is largely a repricing of interest‑rate expectations, not a full reversal of the fundamental forces behind gold’s broader advance,” he said. Gold may stay under near‑term pressure as markets reprice September‑hike odds, bringing further profit‑taking, consolidation and volatility.
Yet investment demand for gold could strengthen again should Treasury yields stabilize or pull back and fiscal concerns return to the forefront. Massabni holds that so long as gold preserves its broader uptrend structure and buying interest re‑emerges at key support levels, the current pullback may represent an opportunity to rebuild long positions rather than the onset of a new bear market.
$66 Marks Critical Test for Silver
Compared with gold, silver faces clearer technical tests. Prior to Warsh’s speech, silver briefly climbed above $70 per ounce to hit a roughly two‑month high, before retreating quickly amid shifting rate expectations.
Massabni argued that silver’s drop toward $66 does not necessarily signal the end of its larger uptrend. It is more likely profit‑taking, long‑position liquidation and technical correction following a powerful rally. Silver is especially sensitive to rising real yields and US dollar strength. Should inflation or employment data print hotter‑than‑expected, expectations for further policy tightening may intensify, leaving silver exposed to downside risk before a new equilibrium is established.
He noted that $66 serves as a major threshold to gauge whether buying interest will step in to underpin prices. If silver can form a base above $66 and reclaim $68 and then $70, recent weakness will look like a healthy correction within a bull market. A sustained move back above $70 would offer stronger confirmation that this corrective phase is nearing completion.
However, a break below $66 alongside climbing Treasury yields and peRSIstent dollar strength would warrant vigilance over risks of a deeper correction.
Middle‑East Tensions Add Uncertainty
Massabni also noted that Middle‑East geopolitics introduce extra uncertainty for both silver and gold. Tensions between the United States and Iran and oil prices approaching $90 per barrel can produce dual‑sided effects on silver.
On one side, higher energy costs amplify inflation pressures and encourage the Fed to maintain tighter monetary policy, creating fresh headwinds for precious metals. On the other side, escalating geopolitical risks can boost safe‑haven demand and lend support to gold and silver.
Overall, Massabni expects elevated volatility across gold and silver until investors receive clearer signals on inflation, employment and Federal Reserve policy direction. For gold, the key question is whether the US economy and government finances can withstand prolonged high interest rates. For silver, markets first need to confirm whether the $66 level holds and whether prices can eventually retake $70.
“I think markets have entered a phase where patience matters more than chASIng prices,” Massabni commented. Provided gold’s pullback remains contained and the broader bull‑market structure stays intact, such weakness is more likely a potential buying opportunity instead of the start of a new bear market. He holds a similar view for silver: if structural factors supporting precious‑metal gains remain in place and markets confirm the correction is over, sharp declines may ultimately turn into fresh entry points.