U.S. Treasury Secretary Yellen: Gold Seems Like a Classic Speculative Sell-off Rally

U.S. Treasury Secretary Janet Yellen remarked that gold's recent sharp decline appears to be a textbook example of a speculative sell-off rally. Precious metals saw a dramatic drop in early February 2026, with gold falling nearly 10% in one session and silver plunging 16% according to market data.

Market participants attributed the turmoil to a combination of factors, including shifting monetary policy expectations and overextended bullish positions. The nomination of Kevin Warsh as the next Federal Reserve Chair sent the U.S. dollar higher, forcing a reassessment of rate expectations and triggering a sharp correction according to analysis.

Treasury yields also fell in early trading, with the 10-year benchmark declining to 4.215% as risk sentiment weakened and investors sought safety according to reports. Analysts noted that the market's reaction was partly driven by a broader sell-off in precious metals and concerns over stretched positioning according to analysis.

Why Did the Sell-off Happen?

The selloff was fueled by a combination of speculative activity and macroeconomic shifts. Gold and silver had experienced a prolonged rally in 2025, driven by geopolitical tensions and expectations of easier monetary policy. However, this created highly concentrated positions that were vulnerable to a reversal according to reports.

The nomination of Kevin Warsh introduced uncertainty about the Fed's future policy direction. While not seen as a strong advocate for aggressive rate cuts, Warsh's appointment reinforced expectations of a more hawkish stance, boosting the dollar and increasing the opportunity cost of holding non-yielding assets like gold according to analysis.

How Did Markets Respond?

The reaction was swift and severe. Exchange-traded funds tracking gold and silver saw significant outflows, with silver holdings hitting their lowest level since November 2025 according to data. Futures data also showed a sharp reduction in speculative long positions, particularly in the COMEX markets according to reports.

Margin requirements for gold and silver futures were also raised by the CME Group, forcing traders to either post more collateral or reduce exposure. This mechanical factor exacerbated the selling pressure in a highly leveraged environment according to analysis.

Precious metals rebounded after the initial selloff, with gold recovering more than 3% in Asian trading to $4,822 an ounce and silver rebounding 5.3% to $83.50 according to market data. However, analysts cautioned that volatility would likely remain elevated in the near term according to financial analysis.

What Are Analysts Watching Next?

Investors are now closely monitoring several key factors. U.S. economic data will provide clues about real interest rates and the dollar's direction, both of which are critical for precious metals according to reports. The extent of "dip-buying" from Chinese investors is also a key variable, especially with the Lunar New Year approaching according to analysis.

Geopolitical tensions remain a wildcard. A potential escalation between the U.S. and Iran could trigger a renewed flight to safe-haven assets like gold according to market analysis. However, without a clear catalyst, the market is expected to remain range-bound until new information emerges according to forecasts.

The broader macroeconomic environment will continue to dominate sentiment. Until there is greater clarity on the Fed's policy path and the direction of global risk appetite, precious metals are likely to remain volatile according to financial reports.