Last week’s dizzying swings in the gold market didn’t come out of nowhere—and according to US Treasury Secretary Scott Bessent, a big part of the blame lies thousands of miles away.
Speaking on Fox News, Bessent pointed directly at Chinese traders for fueling what he described as an overheated and ultimately unstable rally in precious metals.
“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.”
From Record Highs to Sudden Reversal
Bessent’s comments came in response to a question about gold’s record-breaking surge, driven by a potent mix of speculative buying, geopolitical anxiety, and growing concern about the Federal Reserve’s independence. For weeks, gold appeared unstoppable—until it wasn’t.
The rally abruptly reversed last week, catching traders off guard and sending shockwaves through global markets. The turbulence rippled well beyond precious metals, helping push the US dollar to its first weekly gain since early January.
At the same time, US equities told a very different story.
Stocks Cheer, Dollar Rallies
As gold stumbled, confidence surged elsewhere. The Dow Jones Industrial Average smashed through the 50,000 mark for the first time ever, a milestone Bessent was quick to highlight as evidence of economic momentum.
With midterm elections looming in November, the Treasury secretary framed the Dow’s record high as more than a market headline—calling it a signal that the US economy is entering an upward cycle that could benefit everyday Americans.
Investor optimism around strong corporate earnings and broader economic resilience has helped reinforce that narrative, even as commodities flash warning signs of excess speculation.
Fed Balance Sheet: No Rush Ahead
Turning to monetary policy, Bessent struck a notably cautious tone on the Federal Reserve’s next moves—particularly when it comes to trimming its massive balance sheet.
“I wouldn’t expect them to do anything quickly,” he said. “They’ve moved to the ample-regime policy, and that does require a larger balance sheet, so I would think that they’ll probably sit back, take at least a year to decide what they want to do.”
The message was clear: don’t expect sudden tightening or dramatic shifts from the Fed anytime soon.
Politics, the Fed, and Trump’s Expectations
Bessent also addressed questions surrounding Kevin Warsh, President Donald Trump’s nominee to become the next Federal Reserve chair. He emphasized that Warsh would be “very independent,” while still being mindful that the Fed remains accountable to the American public.
During a Senate hearing on Thursday, Bessent raised eyebrows by saying it would be up to Trump whether to sue Warsh if he failed to cut interest rates as the president prefers.
Pressed by Senator Elizabeth Warren, Bessent clarified that the comment stemmed from a joke Trump had made, defended Warsh’s qualifications, and reiterated Trump’s expectation that his Fed nominee broadly align with his views on interest rates.
Gold’s Warning Shot
For now, Bessent’s remarks add a sharp political edge to what had already become a volatile market story. His description of gold’s surge as a “speculative blowoff” suggests Washington may see the recent chaos not as a safe-haven rush—but as a cautionary tale about excess leverage and global speculation.
As Chinese regulators tighten margins and investors reassess risk, the question facing markets is whether gold’s pullback marks a temporary pause—or the end of a rally that ran too hot, too fast.