U.S. Treasury Secretary Blames China for Recent Gold Price Volatility
U.S. Treasury Secretary Scott Bissent has accused China of contributing to significant fluctuations in the gold market observed last week, labeling the speculation from China as "uncontrolled" and a factor in the rising prices of the precious metal.
In an interview with Fox News, Bissent stated:
"Gold prices have faced disturbances in China, prompting them to tighten margin requirements. This suggests that speculation has led to a notable increase in gold prices."
Bissent's comments were made in light of the recent record highs in gold prices, which have been driven by speculative buying, geopolitical tensions, and uncertainties surrounding the Federal Reserve's independence, particularly following an unexpected decline in its performance last week.
These market disturbances also influenced the currency sector, with the dollar appreciating for the first time since early January. Meanwhile, the Dow Jones Industrial Average surpassed the 50,000-point threshold for the first time, reflecting growing investor confidence in the U.S. economy and corporate earnings.
As the midterm elections approach in November, Bissent viewed the Dow's performance as indicative of an upward economic trend that could benefit American citizens.
On the topic of Federal Reserve policy, Bissent indicated that the central bank would proceed with caution regarding any plans to reduce its balance sheet, noting:
"I do not anticipate any swift actions. They have adopted a policy of maintaining a larger balance sheet, which suggests they will likely be hesitant and take at least a year to reach a decision."
Bissent also commented on the nomination of Kevin Warsh by President Trump for the Federal Reserve chair, commending his qualifications:
"He will operate independently but will acknowledge that the Federal Reserve is accountable to the American public."
During a Senate hearing, Bissent addressed the possibility of legal action against Warsh should he fail to lower interest rates as Trump desires, clarifying that the ultimate decision lies with the president. He emphasized that Trump’s remarks were made in jest, underscoring the expectation that Warsh would align with the administration's views on interest rates.
Globally, gold and silver continue to attract investor interest, while markets remain vigilant regarding the Federal Reserve's actions and their implications for the economy and financial markets.
