【By Guan察者网, Yuan Jiaqi】
Driven by speculative buying, geopolitical turbulence, and concerns over the independence of the Federal Reserve, the precious metals market once experienced record-breaking price increases. However, this trend reversed abruptly last week. On February 5, international gold and silver prices plummeted sharply, with the spot and futures prices of silver falling nearly 50% from their historical highs set on January 29.
U.S. Treasury Secretary Bensinger again blamed China. When interviewed by U.S. media, he attributed the recent sharp fluctuations in the gold market to so-called "Chinese traders."
On February 8, during an appearance on Fox News Channel's "Sunday Morning Futures" program, he claimed, "The recent volatility in gold prices is due to some instability in the Chinese market. The regulatory authorities had to increase margin requirements. In my view, the current movement in gold looks like a typical speculative bubble bursting."
However, the fact is that the Chicago Mercantile Exchange Group announced on January 30 that it would increase the metal futures margin requirements, raising the gold futures margin at the New York Mercantile Exchange from 6% to 8%, and the silver futures margin from 11% to 15%. The new rules took effect after the close of trading on February 2.
On that day, the April gold futures price fell by more than 10%, and the March silver futures price dropped by more than 30%. President Trump announced his nomination of former Federal Reserve Board member Kevin Warsh as the next Federal Reserve Chair. Market expectations of a more hawkish monetary policy from the Fed were strong, which stimulated a significant rise in the dollar and a sharp decline in precious metal prices.
Christopher Forbes, head of Asia and Middle East markets at CMC Markets, an online financial trading platform, said that the sharp drop in gold prices was a typical correction after a steep rally, and the long-term bullish trend remained unchanged.
Matthew Piggott, head of gold and silver operations at independent research firm Metal Focus, described the January surge in precious metals prices as a "irrational exuberance." He believes that although the current selling was extreme, it was a healthy adjustment.
Video screenshot
The turmoil in the gold market led the dollar to post its first weekly gain since early January. Meanwhile, due to improved market sentiment and investors buying dips, the three major indices on the New York stock market rose significantly on the 6th, with the Dow Jones Industrial Average breaking through the 50,000 level for the first time.
AFP reported that the Dow Jones Index has moved past concerns about artificial intelligence companies. For most of the past two and a half years, the index has steadily risen, only showing volatility around April 2025 when Trump announced the so-called "Liberation Day" tariff proposal.
Bloomberg and other media pointed out that as the November midterm elections approach, Bensinger cited the Dow's record high as evidence that the U.S. economy is entering an upward cycle, a trend that will benefit ordinary Americans.
He praised Trump's economic plan, saying he expects the U.S. economy to achieve "very strong growth" in 2026.
"We are seeing the industrial sector hit new highs," Bensinger said proudly, "In my 35 to 40 years of experience on Wall Street, that means Wall Street is telling you: prosperity for Main Street is coming."
However, the show host pointed out that the market is still influenced by several major decisions, including the U.S. Supreme Court's ruling on Trump's tariff case.
Last month, the U.S. Supreme Court went into a four-week recess without making a decision on the case, with the next possible date for a ruling being February 20. During the waiting period, the disputed tariffs remain unchanged. According to data from the U.S. federal government, Trump's tariffs cost American importers over $1.6 billion per month.
Despite this, Bensinger continued to defend the tariff policy, praising Trump for using tariffs as a bargaining chip to force countries like China to sit at the negotiation table, and claiming that if the Supreme Court rules against the president and strips him of his "emergency powers," it would be a great loss for the American people.
He even twisted facts, claiming that it was Trump's threat to impose 100% tariffs that forced China to delay a so-called "plan that could destroy the global economy" to restrict rare earth exports.
The host then mentioned that, along with the fluctuation in gold prices, the rare earth and critical minerals markets also experienced significant volatility. Bensinger did not directly address whether this was related to the Trump administration's recent efforts to establish a "critical minerals alliance" to counter China, but instead boasted about the U.S.'s coordination capabilities on rare earth issues, saying that the relevant summit demonstrated America's "leadership."
He said, "The U.S. is leading the effort to resolve the rare earth issue. If a country can control your supply chain, you have no sovereignty. And we are enhancing our supply chain resilience."
Later, Bensinger cited the example of John Deere, an American agricultural machinery giant, which recently built new factories in Indiana and North Carolina, attempting to prove that the tariff policy is pushing companies to move production back to the U.S.
Bensinger even acted out, saying, "The president asked the CEO of John Deere, 'Why are you doing this?' He replied, 'Sir, it's completely because of your tariff policy.'"
After the mid-year meeting between the Chinese and U.S. presidents in Busan, the two sides reached a temporary truce in trade disputes, agreeing to continue extending certain tariff exclusion measures, and Sino-U.S. relations have stabilized.
Bensinger said that he currently has no clear estimate of when the full text of the agreement with China will be made public. He also stated that China has fulfilled its trade commitments so far, completing soybean purchases.
Regarding Sino-U.S. relations, he claimed that the U.S. will become a strong competitor to China, emphasizing that the U.S. "does not seek decoupling, but needs risk mitigation."
Last month, U.S. Trade Representative Griles proposed, at the Davos Economic Forum in Switzerland, that another round of Sino-U.S. trade negotiations should be held before Trump's visit to China in April. He suggested that both sides first focus on cooperation in basic goods and services, temporarily setting aside highly sensitive issues such as technology competition and rare earth magnet supplies.
During the summit, Griles admitted that after China "disrupted" various rare earth supplies, the Trump administration "had to be realistic," and sought dialogue with China to explore what measures the U.S. could take to restore the rare earth supply.
However, he also defended the Trump tariff policy, stating that it was a necessary measure for the U.S. to use all available tools within its authority to protect its economy.
On January 21, Gao Jiakun, spokesperson for the Chinese Foreign Ministry, responded, "For specific issues, it is recommended to consult the relevant Chinese authorities. China and the United States should jointly implement the important consensus reached by the leaders of the two countries to inject more stability and certainty into Sino-U.S. economic and trade cooperation and the world economy."
He Yongqian, spokesperson for the Ministry of Commerce, later responded, saying that in 2025, under the strategic guidance of the leaders of the two countries, China and the United States upheld the principles of equality, respect, and mutual benefit, held five rounds of economic and trade consultations, achieved a series of positive outcomes, fully demonstrating that China and the United States can find solutions to economic and trade differences through equal dialogue and consultation. After the Busan meeting between the leaders of the two countries, the two sides maintained communication at all levels through the Sino-U.S. economic and trade consultation mechanism, jointly promoting the implementation of the important consensus of the leaders' meeting and the results of the Kuala Lumpur economic and trade consultation. Next, China is willing to work with the U.S. to maintain and implement the important consensus of the leaders of the two countries, make good use of the Sino-U.S. economic and trade consultation mechanism, manage differences, promote cooperation, and promote the stable, healthy, and sustainable development of Sino-U.S. economic and trade relations.
This article is exclusive to Observers, and unauthorized reproduction is prohibited.
Original: toutiao.com/article/7604672373828239922/
Statement: The views expressed in this article are those of the author and do not necessarily reflect the position of the publisher.