Scott Bessent denounces uncontrolled speculation at the origin of the gold crash

Gold collapsed in just a few hours, surprising investors and analysts after an all-time high. This sudden shock revealed the speculative workings that shake global markets. In the flood of interpretations, that of Scott Bessent, former Soros fund strategist and current advisor to the US Treasury, hits the mark. He accuses Chinese traders' leveraged speculation, amplified by a tightening of margins, of having caused 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 abrupt movement does not reflect a fundamental change in the overall economy or in the demand for physical gold. He called it “classical speculative blow-off”a phase of euphoria followed by a forced liquidation. He declared : “Chinese traders, on leveraged positions, were forced to liquidate their assets when margin requirements were increased”.

Here are the facts and mechanisms highlighted by Bessent:

• The surge in the price of gold is believed to have been fueled by strong speculative activity in China, not strong fundamentals;
• Chinese financial authorities imposed higher margin requirements, forcing highly leveraged traders to close their positions;
• This massive closure triggered a domino effect, causing widespread selling and an accelerated fall in prices;
• No structural weakness in the world economy is involved according to Bessent, who insists on the exclusively technical and speculative origin of the correction;
• The phenomenon is described as an isolated episode, but powerful enough to cause a temporary shock to global markets.

Bessent's analysis reveals market fragility fueled by a concentration of risky positions in jurisdictions with variable regulation. If his words are intended to be reassuring regarding the fundamental prospects of gold, they underline the capacity of certain financial centers to cause global tremors through leverage and brutal disengagement.

Towards a structural instability of global markets?

Beyond the isolated speculative phenomenon, Scott Bessent invites a global reading of the event, evoking a worrying dynamic for all world markets.

He believes that this localized liquidity crisis illustrates the increased vulnerability of international markets to political or regulatory decisions taken unilaterally. He declares: “the impact of Chinese national measures is now having instantaneous repercussions on global markets, destabilizing capital flows on an unprecedented scale”. This analysis highlights that the internationalization of markets has not been accompanied by coordinated governance, which increases the frequency of shocks.

In this context, several observers wonder about the potential consequences for other so-called assets “shelters”including bitcoin and major cryptos. Although Bessent did not comment on this point, the severity of the gold correction could encourage some investors to redeploy their capital towards assets less exposed to sudden regulatory interventions.

While the price of gold had crossed $5,311 per ounce, its sudden fall reveals the vulnerability of the markets to speculation. Scott Bessent's analysis sheds light on a deeper imbalance, where local decisions and leverage can, in a matter of hours, shake up the traditional benchmarks of financial stability.