Silver Pummeled by Fed Hawkishness: August Rally Snuffed Out

US government debt concerns and Federal Reserve inflation fight have sent silver prices on a wild ride over the past week.

The metal had been rising steadily for most of August, driven by worries over the sustainability of US debt, but hit a wall on Friday after Fed Chair Kevin Warsh's appearance at the Jackson Hole symposium.

Warsh declared that inflation remains above the central bank's 2 percent target and pushed back against market expectations for imminent rate cuts. The PCE price index still runs at 3.7 percent in July, and he pointedly declined to offer forward guidance.

The result was a sharp one-day sell-off, with silver prices dropping 4.2 percent to $67.09 per ounce, the largest decline since May.