In response to heightened volatility in gold and silver prices, major state-owned banks in China have announced increases to margin requirements for deferred contracts.
Agricultural Bank of China issued a notice on the evening of June 4th, stating that from the close of settlement on Friday, June 5th, 2026, the margin ratio for Au(T+D) and Ag(T+D) contracts will be adjusted from 100% to 120%. Any subsequent adjustments to the margin ratios for these contracts will be communicated separately.
This move follows a similar announcement from China Construction Bank on June 2nd, which decided to raise the margin requirement from 100% to 120% for contracts including Au(T+D), mAu(T+D), and Ag(T+D), effective from the close of settlement on June 4th, 2026.
As of the latest update, other major state-owned banks have not yet released comparable notifications.
Previous Margin Adjustments
This is the second round of margin increases this year. Back in February, against a backdrop of persistently high and volatile international precious metal prices and rising retail investment interest, several banks including Industrial and Commercial Bank of China, Agricultural Bank of China, and China Construction Bank announced a unified increase in margin ratios for their proxy individual precious metal deferred businesses from 80% to 100%.
ICBC stated its adjustment, covering contracts like Au(T+D), mAu(T+D), and Ag(T+D), would take effect from the close of settlement on February 27th. Agricultural Bank announced its increase for similar contracts effective from February 26th. China Construction Bank also made its adjustment effective from February 27th.
Bank of Communications released a notice indicating its margin ratio for proxy individual client contracts would rise from 80% to 100%, effective from the close of settlement on March 2nd, 2026.
Bank of China took a slightly different approach. It announced that from the close of settlement on February 24th, the client margin ratio for silver deferred contracts would be adjusted from 77.49% to 77.52%, while the ratio for gold deferred contracts would remain unchanged at 55.44%.
Outlook for Gold Prices
The future direction of gold prices remains a key focus. A recent report from the European Central Bank noted that gold has surpassed US Treasury bonds to become the largest reserve asset held by central banks globally. However, after hitting a record near $5,600 per ounce in late January, London spot gold has been declining and is currently hovering around $4,500 per ounce.
Analysts from Baocheng Futures attribute the recent decline in gold primarily to two factors: fluctuations in US-Iran tensions and persistent market expectations for Federal Reserve interest rate hikes. On the macroeconomic front, resilient US economic data has increased market bets on a Fed rate hike by year-end to around 50%. A strong US dollar and elevated Treasury yields continue to pressure non-yielding assets like gold. Furthermore, consecutive net outflows from the SPDR Gold ETF indicate institutional funds are still exiting.
Looking ahead, Hua'an Futures suggests gold may face consolidation in the short term due to factors like rising inflation expectations and slowing investment demand. Silver might see a global supply-demand deficit for the sixth consecutive year, but excessively high prices could spur exploration of silver-saving technologies in industrial applications and dampen consumption and investment demand. It is anticipated that gold and silver prices will experience weak volatility in June, with price swings potentially gradually subsiding.
Guoxin Nonferrous Metals posits that if US core inflation in May falls below 3% and non-farm payroll data meets expectations, rate hike expectations would cool, potentially allowing gold prices to rebound. Conversely, if inflation and employment data disappoint, the probability of the Fed maintaining its hawkish stance would rise, putting downward pressure on gold. From a medium-term perspective, if US inflation data continues to improve, market expectations for eventual rate cuts should gradually recover. Coupled with sustained central bank gold purchases globally, gold prices are expected to see further upward movement.
Comments