Precious metals markets recently experienced a record-breaking rally, driven by speculative buying, geopolitical instability, and concerns over Federal Reserve independence. However, this upward trend reversed sharply last week. On February 5th, international gold and silver prices fell significantly, with spot and futures silver prices dropping nearly 50% from their record highs set on January 29th.
US Treasury Secretary has once again pointed fingers at China. In an interview with American media, he attributed last week's sharp fluctuations in the gold market to so-called "Chinese traders."
During a February 8th appearance on a Fox News Channel program, he claimed, "The recent unusual movement in gold prices is linked to unstable trading conditions in the Chinese market, which forced regulators to increase margin requirements. In my view, the current gold trend resembles a typical speculative bubble bursting."
In reality, CME Group had already announced an increase in metal futures margins on January 30th, raising the margin for COMEX gold futures from 6% to 8% and for silver futures from 11% to 15%. The new rules took effect after the close on February 2nd.
That day, April gold futures prices fell over 10%, while March silver futures dropped more than 30%. Also on that day, former Federal Reserve Governor Kevin Warsh was nominated as the next Fed Chair. Strong market expectations of a hawkish shift in future US monetary policy stimulated a significant strengthening of the US dollar and a sharp correction in precious metal prices.
Christopher Forbes, Head of Asia and Middle East at online financial trading platform CMC Markets, stated that the sharp decline in gold prices is a typical correction following a rapid rise, and the long-term bullish trend remains unchanged.
Matthew Piggott, Head of Gold and Silver at independent research firm Metals Focus, described January's precious metals surge as "irrational exuberance." He believes that although the current sell-off is extreme, it represents a healthy adjustment.
The turbulence in the gold market contributed to the US dollar's first weekly gain since early January. Meanwhile, improved market sentiment and investor bargain-hunting led to significant gains for the three major US stock indices on the 6th, with the Dow Jones Industrial Average surpassing the 50,000-point milestone for the first time.
According to an AFP report, the Dow shrugged off concerns about artificial intelligence companies. For most of the past two and a half years, the index has steadily climbed, experiencing volatility only around April 2025 when the former president announced a tariff proposal.
Media outlets including Bloomberg noted that with midterm elections approaching in November, the Treasury Secretary cited the Dow's new high as evidence that the US economy is entering an upward cycle that will benefit ordinary Americans.
He heavily promoted the effectiveness of the former president's economic plan, predicting "extremely strong growth" for the US economy in 2026.
"We see industrial sectors in the market hitting new highs," the Secretary stated proudly. "In my 35 to 40 years on Wall Street, this tells me that Wall Street is signaling: Main Street is about to prosper."
However, the program host pointed out that markets remain influenced by several major pending decisions, including the US Supreme Court's ruling on the former president's tariff case.
Last month, the Supreme Court adjourned for four weeks without issuing a ruling on this case. The next possible date for a decision is February 20th, during which the disputed tariffs remain in effect. According to US federal government data, these tariffs cost American importers over $16 billion monthly.
Despite this, the Treasury Secretary vigorously defended the tariff policy, praising the former president's use of tariffs as leverage to pressure China and other countries to "come to the negotiating table." He claimed that a Supreme Court ruling against the president, stripping his "emergency powers," would be a significant loss for the American people.
He even inaccurately suggested that the former president's threat of 100% tariffs forced China to delay a rare earth export control plan that he claimed "could devastate the global economy."
The host then noted that alongside gold price volatility, rare earth and critical mineral markets also experienced significant unusual movements. The Secretary did not directly address whether this was related to the Trump administration's recent efforts to form a "Critical Minerals Alliance" to counter China. Instead, he highlighted US coordination capabilities on rare earths, stating the related summit demonstrated American "leadership."
"America is leading the effort to address the rare earth issue. If one country can control your supply chain, you have no sovereignty. We are strengthening the resilience of our own supply chain," he said.
Subsequently, the Secretary cited US agricultural machinery giant John Deere's new factories in Indiana and North Carolina as evidence that tariff policies are encouraging companies to relocate production lines back to the United States.
The Secretary even acted out an anecdote: "The president asked him [John Deere's CEO], 'Why are you doing this?' He said, 'Sir, it's entirely because of your tariff policy.'"
Following the meeting between the Chinese and US leaders in Busan last year, the two countries reached a provisional "truce" in their trade dispute, agreeing to extend certain tariff exclusion measures. US-China relations have since stabilized.
The Secretary stated he currently has no clear estimate for when the full text of the agreement with China will be formally published. He also mentioned that China has so far fulfilled its trade commitments by completing soybean purchases.
Discussing US-China relations, he declared that the US will be a strong competitor to China, emphasizing that America "does not seek decoupling but needs to de-risk."
Last month, US Trade Representative Greer proposed at the World Economic Forum in Davos that another round of US-China trade talks be held before the former president's potential visit to China in April. He suggested the two sides initially cooperate on basic goods and services, temporarily setting aside highly sensitive issues like technology competition and rare earth magnet supply.
During his summit speech, Greer admitted that after China "disrupted" supplies of various rare earths, the Trump administration "had to be realistic" and seek dialogue with Beijing to discuss measures the US could take to ensure the normalization of rare earth supplies.
However, he simultaneously defended the Trump administration's tariff policy, calling it a necessary measure using all available tools within its authority to protect the US economy.
On January 21st, Chinese Foreign Ministry Spokesperson Guo Jiakun responded to related inquiries by stating, "For specific questions, I suggest you direct them to the competent Chinese authorities. China and the US should work together to implement the important consensus reached by the two heads of state, injecting more stability and certainty into China-US economic relations and the world economy."
Chinese Ministry of Commerce Spokesperson He Yongqian subsequently responded that in 2025, under the strategic guidance of the two heads of state, China and the US conducted five rounds of economic and trade consultations based on equality, respect, and mutual benefit, achieving a series of positive outcomes. This fully demonstrates that both sides can find solutions to economic and trade differences through equal dialogue and consultation. Following the leaders' meeting in Busan, both sides maintained communication at various levels through the economic and trade consultation mechanism, jointly promoting the implementation of the important consensus from the meeting and the outcomes of the Kuala Lumpur consultations. Going forward, China is willing to work with the US to maintain and implement the important consensus of the two heads of state, utilize the economic and trade consultation mechanism, manage differences, advance cooperation, and promote stable, healthy, and sustainable development of China-US economic and trade relations.