Bessent Decodes Gold’s Rapid Fall

Gold collapsed in just a few hours, surprising investors and analysts after a historic peak. This sudden shock revealed the speculative mechanisms shaking global markets. Amid the flood of interpretations, that of Scott Bessent, former strategist of the Soros fund and current advisor to the US Treasury, hits the mark. He accuses leveraged speculation by Chinese traders, amplified by margin tightening, for causing what he calls a “speculative blow-off”.

High-risk speculation : Scott Bessent denounces the role of Chinese markets

In a statement, Scott Bessent attributed the sudden drop in gold prices to a speculative correction caused by Chinese markets.

According to him, this sharp movement does not reflect any fundamental change in the global economy nor in physical gold demand. He called it a “classical speculative blow-off”, a phase of euphoria followed by forced liquidation. He states : “Chinese traders, on leveraged positions, were forced to liquidate their assets when margin requirements were raised”.

Here are the facts and mechanisms highlighted by Bessent :

• The gold price surge was fueled by strong speculative activity in China, not by solid fundamentals ;
• Chinese financial authorities imposed a rise in margin requirements, forcing highly leveraged traders to close their positions ;
• This massive closure triggered a domino effect, causing widespread selling and accelerated price decline ;
• Bessent says no structural weakness of the global economy is involved, emphasizing an exclusively technical and speculative basis for the correction ;
• The phenomenon is described as an isolated episode, but strong enough to cause a temporary shock on global markets.

Bessent’s analysis reveals market fragility fueled by concentration of risky positions in jurisdictions with variable regulation. While his words aim to reassure about gold’s fundamental prospects, they highlight certain financial centers’ capacity to cause global tremors through leverage and abrupt disengagement.

Toward structural instability of global markets ?

Beyond the isolated speculative phenomenon, Scott Bessent calls for a global reading of the event, referring to a worrying dynamic for all global markets.

He believes this localized liquidity crisis illustrates the increased vulnerability of international markets to unilateral political or regulatory decisions. He states : “The impact of Chinese national measures now instantly affects global markets, destabilizing capital flows on an unprecedented scale.” This analysis highlights that market internationalization was not accompanied by coordinated governance, which increases shock frequency.

In this context, several observers wonder about potential consequences for other so-called “safe-haven” assets, notably bitcoin and major cryptos. Although Bessent has not commented on this point, the severity of the correction in gold could prompt some investors to redeploy capital toward assets less exposed to sudden regulatory interventions.

While the gold price had surpassed $5,311 an ounce, its sudden fall reveals market vulnerability to speculation. Scott Bessent’s analysis sheds light on a deeper imbalance, where local decisions and leverage can, in a few hours, shake traditional benchmarks of financial stability.