Commodity markets showed sharp divergence over the week, with precious metals falling significantly following Fed Chair Kevin Warsh's hawkish Jackson Hole speech, while energy markets remained supported by geopolitical risk and tightening supply conditions.
Gold was the weakest-performing commodity of the week, declining 4.34% to $4,455.11 per ounce from $4,657.17 on Monday. Most of the decline occurred on Friday, August 28, when gold fell $144.04 following Warsh's comments that reinforced expectations for higher interest rates.
The mechanism was clear: the shift in Federal Reserve rate expectations pushed real yields higher, increasing the opportunity cost of holding non-yielding gold. The metal fell below the psychologically significant $4,400 level during Friday's session, with the decline also weighing on gold mining companies globally.
Silver followed a similar trajectory, falling 3.32% over the week to $66.38 per ounce. In addition to the pressure from higher rates and a stronger US Dollar, silver faced an emerging structural demand concern. Global silver demand from the solar industry is expected to decline for a second consecutive year in 2026 as manufacturers continue reducing the amount of silver required per solar module. With silver accounting for approximately 20% of a module's production cost, efforts to reduce usage represent a potential headwind for an important source of industrial demand.
Energy markets moved in the opposite direction. WTI crude gained 1.26% over the week to $83.40 per barrel, while Brent rose 0.82% to $89.31. Escalating US-Iran tensions surrounding the Strait of Hormuz remained the primary driver, briefly pushing Brent above $90 per barrel during the week.
Importantly, crude oil maintained its weekly gains despite Friday's sharp Dollar rally, indicating that the geopolitical risk premium was sufficient to offset the traditional headwind from a stronger US currency.
Supply conditions also remained supportive. The US oil rig count declined by five to 447 during the week ending August 28, while gas rigs increased by five to 132, leaving the overall rig count unchanged at 588.
Natural gas was the strongest-performing commodity of the week, with Henry Hub gaining 4.26% to $2.888/MMBtu. US inventories increased by 15 Bcf, in line with expectations, but remained 0.9% below year-ago levels. Elevated LNG feedgas deliveries to US export terminals provided an additional source of demand support.
Overall, the week highlighted a clear divergence across commodity markets. Energy and industrial metals remained supported by supply constraints and geopolitical risk, while precious metals came under significant pressure from the hawkish shift in US monetary policy expectations. Natural gas led the commodity complex with a 4.26% gain, while gold was the weakest performer with a 4.34% decline.
