Editor’s Note
As gold prices swing dramatically, major financial institutions are scaling back retail trading services—a clear sign of mounting risk aversion in volatile markets.
As international gold prices experience a roller-coaster ride and market sentiment remains highly volatile, domestic banks and gold retailers have simultaneously pressed the “pause button.”
According to statistics, nearly half of the banks with financial membership status at the Shanghai Gold Exchange (SGE) have tightened their agency services for individual precious metals trading over the past six months by closing channels, suspending new position openings, or restricting purchases. Concurrently, leading gold retailers such as Caibai Co., Ltd. (605599.SH) and China Gold Group (600916.SH) have implemented measures including weekend suspensions and quota management for gold repurchase services.
Industry insiders believe the direct trigger for this round of collective adjustments is the sharply increased risk control pressure due to extreme gold price volatility. Banks need to prevent client losses exceeding margins in leveraged trading and potential disputes, while retailers face price exposure risks they cannot hedge during non-trading days. Additionally, strengthened regulatory requirements for investor suitability management and rising compliance costs from new gold tax policies have prompted institutions to strategically scale back.
Caibai and China Gold announced in early February the suspension of precious metals repurchase services on weekends, holidays, and other non-trading days of the SGE, along with daily and per-transaction limits during business hours.
Industrial Bank announced on its website that it will close the online banking channel for SGE agency precious metals trading for individuals after February 14, 2026, while counter and mobile banking channels remain open. Looking back, Postal Savings Bank of China announced in December 2025 the cessation of its SGE agency business from January 12, 2026. Bank of Ningbo announced in September 2025 it would stop accepting spot buy orders from individual clients from October 13, while sell orders continue as usual.
Since September last year, at least 11 banks, including Industrial and Commercial Bank of China, China Construction Bank, and China CITIC Bank, have issued similar adjustment notices, mostly involving suspending new position openings or restricting purchases. The SGE currently lists 25 commercial banks as financial members. Based on this, nearly half of the qualified banks have tightened rules in the past six months.
A securities analyst in South China explained to Yicai that the recent gold investment frenzy has attracted many investors, some of whom are merely following the trend with limited understanding of the underlying risks. Against this backdrop, regulators have explicitly required financial institutions to strengthen investor suitability management, another key reason for banks’ prudent adjustments.
Dong Ximiao, Chief Economist of Zhaolian, further pointed out that the new gold transaction tax policy implemented in November 2025 distinguishes between investment and non-investment physical gold transactions, significantly increasing banks’ identification and accounting responsibilities, thereby raising compliance complexity and operational costs. This has led some banks to adjust or even exit the business.
Gold retailers face similar risks. During periods of high volatility, brands like Caibai experienced queues and surging volumes in repurchase services. When repurchases are concentrated on SGE non-trading days, retailers struggle to hedge price risks promptly through trading, accumulating both funding and price exposure.
Typically, retailers like Caibai advance funds to buy back gold, send it to SGE-certified refineries after inspection, and then deposit it into exchange accounts. They often use “T+D” contracts to lock in costs. “T+D” is a deferred delivery trading method offered by the SGE, allowing firms to lock in the purchase price on the transaction day while choosing immediate or postponed delivery.
However, this is not risk-free. Caibai noted in its financial report that even with “T+D” locking the purchase price, risks remain during sharp volatility. The “T+D” market uses daily mark-to-market settlement, requiring continuous margin top-ups during rapid price swings; failure to do so may lead to forced liquidation and actual losses. Additionally, deferred delivery incurs carrying costs, increasing operational expenses over time.
What drives such extreme market movements? Dai Chaosheng, an analyst at Shengda Futures, noted that recent volatility largely reflects the repeated pricing of policy uncertainty premiums. The Fed maintained rates as expected, reiterating data dependence, and Powell’s overall hawkish tone reduced certainty about the annual rate cut path but had limited downward pressure on gold. Meanwhile, Trump’s frequent signals and final decision on the Fed chair nominee ended market uncertainty, triggering a repricing of Fed independence and future policy. Overall, gold’s financial attribute has shifted from clear rate-cut trading; the nominee, perceived as hawkish, makes the future rate-cut path uncertain, bearish for gold.
Zhang Bin, an analyst at Orient Securities, shared this view.
Looking ahead, most institutions believe short-term wide fluctuations will persist, but the long-term bullish logic remains. Dai Chaosheng suggested that high volatility and back-and-forth movements may become the norm absent new substantive risk escalation or clear policy shifts. However, from a medium-term perspective, policy uncertainty, normalized geopolitical risks, and inherent contradictions in the dollar system persist, underpinning gold’s value as a non-credit asset. Any further correction due to receding sentiment or expectation adjustments is more likely a consolidation within a bull structure than a trend reversal.
Li Bin, an analyst at Huatai Securities, offered a long-term view from an allocation perspective. He posited that based on gold’s allocation ratio in global personal and institutional financial assets, if geopolitical conflict risks become normalized and global de-dollarization continues, gold’s pricing anchor might shift from a real-rate-dominated framework to a credit-risk-hedging framework. If the investable gold proportion exceeds the 2011 peak (3.6%) to reach 4.3%-4.8% during 2026-2028, gold prices could rise to $5,400-$6,800 per ounce.
