Treasury Secretary Scott Bessent blames speculative Chinese trading for gold’s sharp volatility as bullion outperforms equities and the Dow scales record highs
US Treasury Secretary Scott Bessent attributed last week’s sharp swings in gold prices to speculative activity in China, describing the rally as “unruly” and cautioning that the precious metal’s surge bore the hallmarks of a classic market blowoff.
“The gold move—things have gotten a little unruly in China,” Bessent said in an interview with Fox News. “They’re having to tighten margin requirements. So gold looks to me kind of like a classical, speculative blowoff.”
His remarks came after bullion staged a record-breaking rally in recent weeks, fuelled by safe-haven demand, geopolitical tensions and lingering concerns over the Federal Reserve’s independence, before abruptly reversing course last week.
Last week’s volatility in bullion coincided with a rebound in the US dollar, which notched its first weekly gain since early January. The Dow Jones Industrial Average surged past the 50,000 mark for the first time.
Bessent said the strength in cyclical stocks and small caps signalled confidence in a broader recovery.
“In my 35–40 years on Wall Street, that tells me Wall Street is telling you that Main Street is about to prosper,” he said, pointing to record highs in the Dow and the Russell small-cap index. “The stock market lives in the future.”
Fed balance sheet, Warsh nomination in focus
On monetary policy, Bessent said that the Federal Reserve is unlikely to rush any move to shrink its balance sheet.
“They’ve moved to the ample-regime policy, and that does require a larger balance sheet,” he said. “I would think that they’ll probably sit back, take at least a year to decide what they want to do.”
He also voiced support for Kevin Warsh, President Donald Trump’s nominee to lead the Federal Reserve, describing him as “very independent” while remaining accountable to the American people.
China trade and rare earths
Beyond gold, Bessent flagged China’s tightening of margin requirements and broader market activity as drivers of commodity volatility. He also highlighted US efforts to diversify supply chains, particularly in rare earth minerals, amid strategic competition with Beijing.
“Countries are not sovereign if one country can control your supply chains,” he said, underscoring the administration’s push to build strategic reserves and reduce dependence on China.
Bessent added that China had fulfilled recent soybean purchase commitments and described bilateral ties as competitive but stable.
“We don’t want to disengage, but we do need to de-risk,” he said.
Crypto, sanctions and trade policy
The Treasury Secretary called for swift passage of crypto market structure legislation, saying regulatory clarity was essential if the US is to position itself as the “crypto capital of the world.”
On sanctions, particularly against Iran, Bessent defended the administration’s “maximum pressure” strategy, arguing that financial restrictions had destabilised key institutions and constrained oil revenues.
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