Sharp swings in gold prices last week were driven in part by speculative trading activity in China, US Treasury Secretary Scott Bessent said, as a record-breaking rally in precious metals reversed and rippled across global markets.
Bessent made the remarks while responding to questions about the sudden volatility in gold.
Speaking on Fox News, Bessent pointed to trading conditions in China as a key factor behind the turbulence. “The gold move thing — things have gotten a little unruly in China,” Bessent said. “They’re having to tighten margin requirements. So gold looks to me kind of like a classical, speculative blowoff.”
His comments came after gold prices surged to record highs before abruptly pulling back, unsettling investors who typically view the metal as a safe-haven asset. The volatility had been fueled by speculative buying, geopolitical tensions and growing concern over the Federal Reserve’s independence, according to Bloomberg.
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Speculation and global uncertainty
According to Bloomberg, the rally in gold was supported by a combination of speculative positioning, geopolitical turmoil and investor unease about central bank policy. Those concerns intensified demand for gold but also made prices vulnerable to sudden reversals once sentiment shifted.
The rapid move lower pointed to how leveraged trades and margin activity can amplify price swings.
The volatility in precious metals coincided with notable moves in other markets. The turbulence helped push the US dollar to its first weekly gain since early January, Bloomberg reported, as investors adjusted positions amid shifting risk appetite.
Equity markets, however, showed resilience. The Dow Jones Industrial Average climbed past the 50,000 mark for the first time, signaling optimism around the US economy and corporate earnings despite instability in commodities.
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Margin rules
Bessent’s remarks also drew attention to the role of margin requirements in cooling speculative excess. He noted that authorities in China have been forced to tighten margin rules, a step often used to curb rapid price increases driven by leveraged trading.
Bessent did not outline any immediate policy action from US officials. As investors continue to weigh geopolitical risks and monetary policy signals, markets are likely to remain sensitive to trading behavior and regulatory moves, Bloomberg reported.
Why did gold prices see sharp swings last week? Scott Bessent says ‘things have gotten a little unruly in China’
