Chinese Banks Tighten Retail Gold Trading Amid
Sharp Price Volatility
Risk controls intensify as banks seek to
curb leveraged trading despite expectations of resilient long-term gold demand
·
Industrial and Commercial Bank of China announced
it will suspend individual trading of precious metals linked to the Shanghai
Gold Exchange from 24 July 2026.
·
Other banks, including:
o
Postal Savings Bank of China
o
Ping An Bank
o
China Guangfa Bank
have either suspended or are preparing to exit
similar retail precious metals trading services.
·
Gold prices have fallen sharply:
o
Dropped below US$4,000 per ounce for the
first time since November.
o
Down nearly 30% from the peak of about US$5,600
per ounce reached earlier in 2026.
·
Key reasons behind the decline:
o
Stronger US dollar.
o
Expectations of prolonged higher US interest rates.
o
Reduced expectations of US Federal Reserve rate
cuts.
o
Rising US Treasury yields, making non-yielding
assets like gold less attractive.
·
Banks have strengthened risk controls by:
o
Raising margin requirements on precious metal
trading products.
o
Some institutions, including Bank of China
and China CITIC Bank, increased margin ratios up to 140%.
·
A margin ratio above 100% requires investors to
provide collateral exceeding the value of their positions, discouraging
speculative trading.
·
ICBC has advised customers to:
o
Close positions.
o
Sell holdings.
o
Take physical delivery of gold and silver before
services are terminated.
·
Analysts view the measures primarily as
risk-control initiatives rather than a sign of weakening long-term gold demand.
·
According to market experts, China's long-term gold
demand remains supported by:
o
Physical investment demand.
o
Strategic asset allocation by investors.
·
Investment banks have revised gold forecasts
downward:
o
Goldman Sachs lowered its year-end target from
US$5,400 to US$4,900 per ounce.
o
Deutsche Bank cut its fourth-quarter forecast by
17% to US$4,800 per ounce.
·
The latest restrictions are part of a broader
regulatory trend dating back to the 2020 Crude Oil Treasure Scandal,
when retail investors suffered significant losses from oil-linked investment
products.
Key Takeaway
Chinese
banks are tightening retail precious metals trading to contain risks arising
from sharp gold price volatility. While speculative trading is being curtailed
through higher margin requirements and service suspensions, analysts believe
China's long-term demand for gold as a physical and strategic investment asset
remains intact.
[ABS News Service/25.06.2026]
Chinese
banks are accelerating efforts to scale back retail trading of precious metals,
with the price of gold below US$4,000 an ounce for the first time since November,
highlighting growing volatility in a market that has lost nearly 30 per cent of
its value since peaking earlier this year.
Industrial
and Commercial Bank of China (ICBC) said on Wednesday it would stop offering individual
trading in precious metals linked to the Shanghai Gold Exchange from July 24.
The
move follows similar announcements by Postal Savings Bank of China, Ping An Bank and China Guangfa Bank, which
have suspended or are preparing to exit the same trading market.
The
move comes as gold prices have retreated sharply from record highs reached earlier
this year, prompting banks to tighten risk controls on precious metal trading products.
Spot
gold briefly fell below US$4,000 an ounce on Wednesday, extending a sharp sell-off
driven by a stronger US dollar and amid expectations that interest rates could remain
high. Gold has retreated significantly from a peak of nearly US$5,600 an ounce reached
earlier this year.
Investors
have also scaled back expectations for Federal Reserve rate cuts, while rising US
Treasury yields have reduced the appeal of non-yielding assets such as gold.
Banks
have responded by tightening risk controls on products that allow margin trading
of precious metals for individuals. Several lenders, including Bank of China and
China CITIC Bank, have raised margin requirements this month, with some reaching
140 per cent.
A
margin ratio above 100 per cent means investors must post collateral exceeding the
value of their positions, which is designed to reduce the appeal of speculative
trading.
ICBC
said the suspension would cover a range of gold and silver contracts traded through
the Shanghai Gold Exchange. Customers were urged to close positions, sell holdings
or take physical delivery before the service is terminated.
Most
banks had already stopped allowing new retail positions in Shanghai Gold Exchange-linked
precious metals products in recent years under regulatory guidance, meaning the
latest measures primarily affect existing customers.
“Chinese
banks are tightening retail precious metals trading as a risk-control response to
heightened price volatility,” said Robin Tsui, gold strategist for the Asia-Pacific
region at State Street Investment Management.
Tsui
said the measures were intended to curb speculative activity and were unlikely to
undermine long-term gold demand in China, which is driven primarily by physical
investment and strategic allocation.
The
recent sell-off has also prompted investment banks to lower their forecasts. Goldman
Sachs cut its year-end gold target to US$4,900 an ounce from US$5,400, while Deutsche
Bank reduced its fourth-quarter forecast by 17 per cent to US$4,800.
The
latest moves also reflect a broader regulatory shift that predates the recent decline
in gold prices.
Iris
Tan, senior equity analyst at Morningstar, said regulators have been tightening
controls on high-volatility retail trading products since the 2020 “Crude Oil
Treasure” scandal, when retail investors suffered heavy losses on a Bank of China
oil-linked investment product.
“The
current wave of suspensions is simply the next phase of that same trend,” Tan said.
“Banks have been narrowing their retail risk boundaries for years.”