Treasury Secretary Points to Chinese Speculation
U.S. Treasury Secretary Scott Bessent has attributed the extreme volatility in precious metals markets to Chinese traders, characterizing recent price swings as a "speculative blowoff" that has shaken global commodity markets.
"The gold move thing—things have gotten a little unruly in China," Bessent told reporters earlier this month. "They're having to tighten margin requirements. So gold looks to me kind of like a classical, speculative blowoff."
Bessent's comments came as silver plunged from a record high near $122 per ounce in late January to below $82 per ounce—a crash that wiped out billions in paper wealth within days. Gold has since stabilized at $5,150 per ounce, up 74.3% year-over-year.
China's Dominant Role in Precious Metals
Nicky Shiels, head of research and metals strategy at MKS Pamp, confirmed that China has been the "dominant driver" impacting precious metals prices. "That's been driven by a mix of speculative inflows, retail and institutional, through a mix of ETFs, physical bars and futures positioning," she told CNBC.
According to data from Capital Economics, Chinese gold-backed ETF holdings have more than doubled since the start of 2025, while gold futures trading activity has increased sharply. The Treasury Secretary has repeatedly noted that China refines a vast majority of the world's silver and rare earth elements, calling this concentration a "single point of failure" for the global economy.
Chinese Analysts Push Back
The characterization has drawn criticism from Chinese market observers. Chinese analysts described Bessent's claims as "groundless," arguing that concern about U.S. policies fueled market volatility rather than Chinese speculation.
"Attributing current market fluctuations to China is neither professional nor objective," one analyst noted, pushing back against the Treasury Department's narrative.
Current Market Conditions
As of late February 2026, precious metals have stabilized following the historic January sell-off:
- Gold: $5,150/oz (unchanged from previous session, +74.3% YoY)
- Silver: $86/oz (up from February lows, +167% YoY)
- Platinum: $1,756/oz
- Palladium: $2,153/oz
The silver market will be in deficit for a sixth consecutive year, according to the Silver Institute, providing structural support for prices despite the recent volatility. Industrial demand from solar panel manufacturing and AI data center infrastructure continues to drive consumption.
Analyst Outlook Remains Bullish
Despite the recent turbulence, major investment banks maintain bullish forecasts for gold. Goldman Sachs holds its year-end 2026 target at $5,400 per ounce, citing expectations of continued central bank accumulation. Bank of America has suggested gold could reach $6,000 per ounce in the coming months.
The precious metals market has experienced a structural shift, with the price floor migrating from consumer-driven demand in Asia to sovereign and institutional accumulation in Western markets. This institutional buying provides a supportive backdrop even as speculative trading creates short-term volatility.
Market participants continue to monitor developments in U.S.-China relations and Federal Reserve policy for directional signals in the months ahead.
Sources: Fortune, Bloomberg, CNBC, MKS Pamp