US Treasury Secretary Scott Bessant said gold prices’ sharp swing last week was driven by speculative trading activity in China as global markets staged a record-breaking rally in precious metals.
US Treasury Secretary Scott Besant’s comments came after gold prices hit record highs before pulling back abruptly. (Reuters file photo)Besant commented in response to a question about the sudden volatility in gold.
Speaking on Fox News, Besant pointed to China’s trade situation as a key factor behind the unrest. “The gold movement thing — things have been a little erratic in China,” Besant said. “They have to tighten margin requirements. So gold looks like a classical, speculative shock to me.”
His comments came after gold prices soared to record highs before suddenly retreating, unsettling investors who typically view the metal as a safe haven. According to Bloomberg, the volatility is fueled by speculative buying, geopolitical tensions and growing concerns about the independence of the Federal Reserve.
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Speculation and global uncertaintyAccording to Bloomberg, gold’s rally was supported by a combination of speculative positions, geopolitical volatility and investor uneasiness about central bank policy. These concerns intensify demand for gold but make prices vulnerable to sudden swings if sentiment shifts.
A fast move to the downside indicates how leveraged trades and margin activity can amplify price swings.
Volatility in precious metals coincides with significant moves in other markets. The turmoil helped push the U.S. dollar to its first weekly gain since early January as investors adjusted positions amid a shift in risk appetite, Bloomberg reported.
Equity markets, however, have shown resilience. The Dow Jones Industrial Average crossed the 50,000 mark for the first time, signaling optimism around the US economy and corporate earnings despite volatility in commodities.
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Margin rulesBesant’s comments also drew attention to the role of margin requirements in hypothetical overcooling. He noted that Chinese authorities have been forced to tighten margin rules, a move often used to prevent rapid price increases driven by leveraged trading.
Besant 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 action, Bloomberg reported.
