On the evening of June 24th, the spot price of gold in London fell below the key psychological level of $4,000 per ounce for the first time since November 2025, with an intraday decline exceeding 3%. At the time of writing, London spot gold was trading at $3,991.2 per ounce, while COMEX gold was at $3,991.7 per ounce, with prices fluctuating around the $4,000 threshold.
Against the backdrop of heightened gold price volatility, several commercial banks have moved to tighten their personal precious metals business operations since June. These measures include suspending agency services for personal precious metals bidding transactions on the Shanghai Gold Exchange (SGE) and further increasing the margin ratios for personal deferred settlement business conducted on behalf of the exchange. By proactively managing these risks upfront, the banks are also signaling to retail investors the need to pay close attention to market fluctuations and maintain reasonable position sizes.
Proactively Reducing Risk Exposure
Amidst the volatile market conditions, commercial banks are fortifying their risk buffers for precious metals business by actively taking steps to reduce leverage.
China Construction Bank announced on June 25th that it will cease its agency services for personal precious metals trading on the Shanghai Gold Exchange starting from the end-of-day settlement on July 24th. The affected products include Au99.99, Au100g, PGC30g, Au, mAu, and Ag contracts.
CCB is not the first bank to announce such a suspension. On June 24th, Industrial and Commercial Bank of China stated that, based on precious metals risk management and business requirements, it will stop offering agency services for personal precious metals bidding transactions on the SGE from the end-of-day settlement on Friday, July 24, 2026, affecting multiple contract types. On June 22nd, China Guangfa Bank issued a notice indicating that, to strengthen risk management and protect investor rights, it plans to fully suspend its agency services for personal precious metals trading on the SGE by the end of June. The bank added that after the suspension, clients could opt for alternative products like gold accumulation plans or gold/silver ETFs to continue their precious metals investments. Ping An Bank also released a related notice on June 10th, specifying that it will close trading permissions for spot contracts (Au99.99 and Au100g) under its agency SGE personal precious metals trading business after market close and settlement on June 30, 2026.
Since last year, as gold prices repeatedly hit record highs, the SGE has adjusted contract margin requirements and daily price limits multiple times to enhance risk control. It has been noted that, alongside suspending high-risk services, increasing margin ratios and raising investment thresholds have become key methods for many banks to mitigate risks in their precious metals businesses recently.
Bank of China announced on June 22nd that, starting from the settlement after market close on June 24th, it will adjust the margin multiplier for gold deferred contracts from 666% to 800%. Consequently, the client margin ratio for gold deferred contracts will be adjusted from 99.9% to 120%. Simultaneously, the client margin ratio for silver deferred contracts will also be adjusted from 99.96% to 119.91%. On the same day, China Guangfa Bank issued a notice adjusting the margin ratios for gold and silver deferred contracts from 100% to 140%, respectively. Huaxia Bank has adjusted the margin ratio for some of its agency personal precious metals deferred trading from 35% to 120%.
The concentrated tightening of personal precious metals services by commercial banks is the result of a combination of surging market risks, stricter regulatory compliance requirements, and strategic retrenchment by the banks themselves. The recent sharp fluctuations in gold prices mean that leveraged deferred contracts can easily lead to insufficient client margins or even margin calls, posing funding and credit risks for the agency banks. Concurrently, regulatory emphasis on investor suitability management is intensifying, stressing the principles of 'seller responsibility' and 'buyer beware,' compelling banks to reassess the alignment of such high-risk products with the risk tolerance of individual investors.
Consequently, many banks have chosen to either raise margin requirements or exit the business altogether, proactively reducing their risk exposure to avoid potential customer disputes and regulatory penalties.
Shifting from Speculation to Steady Allocation
As of June 25th, the international gold price has retreated significantly from its year-to-date high above $5,500 per ounce reached earlier in the year. Faced with the continued weakness in gold prices in the short term, where should individual investors turn?
From a trend perspective, analysts note that the hawkish signals recently released by the U.S. Federal Reserve are still being digested by the market. There remains room for upward revision in market pricing for interest rate hikes within the year, suggesting that real U.S. interest rates are more likely to rise than fall, constituting a core pressure point for gold prices.
Furthermore, although a preliminary agreement has been reached between the U.S. and Iran, attention must still be paid to the subsequent implementation of the memorandum of understanding and the progress of nuclear negotiations. Overall, the current environment lacks a significant unexpected catalyst to break the existing balance between bullish and bearish forces, and gold prices are expected to remain weak with fluctuations in the near term.
Regarding asset allocation strategies, it is pointed out that individual investors might consider making phased allocations during price pullbacks, managing position sizes reasonably, and viewing gold as a portfolio asset rather than a vehicle for short-term speculation. It is anticipated that gold prices will likely continue to experience wide fluctuations at elevated levels in the near term, making a sustained one-directional trend unlikely. However, the medium to long-term fundamental drivers supporting gold prices remain intact.
Individual investors are advised to view the recent sharp volatility in gold prices rationally, seeing it as a technical correction following the previous rapid rally and a reflection of intense macro expectation shifts, rather than a reversal of the overall trend. When allocating to gold assets, retail investors should be cautious: participating in leveraged deferred contracts could lead to permanent capital loss due to forced liquidation during severe volatility. Therefore, it is more suitable to gain exposure through unleveraged instruments like physical gold or gold ETFs. Additionally, investors should abandon the simplistic notion that prices only go up, treating gold as a stabilizer within a diversified asset portfolio rather than a tool for chasing high returns, while always maintaining reasonable position control.
Investors are reminded that with the recent intensification of price volatility in the precious metals markets, it is crucial to thoroughly assess one's own risk tolerance, allocate funds reasonably in line with personal financial circumstances, avoid blindly chasing rallies or selling into panics, strictly control trading positions, and refrain from participating in investment transactions that exceed one's risk-bearing capacity.
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