These past couple of days, friends who trade gold on social media are in an uproar.
The reason is simple—commercial banks are shutting down personal precious metal businesses on a large scale. Banks like Industrial and Commercial Bank of China, China Construction Bank, China Merchants Bank, and Bank of Communications have announced the suspension of agency trading for individual precious metals on behalf of the Shanghai Gold Exchange effective July 24th; some joint-stock banks acted even earlier, shutting down operations by the end of June.
Some say this means banks are preventing people from buying gold. That's incorrect. What the banks are closing is the leveraged trading channel—leveraged deferred contracts like Au (T+D) and Ag (T+D). Simply put, the path to trading gold with leverage has been blocked.
Why block it? Because the price of gold has fallen rather sharply this year.
At the beginning of the year, London gold was still above $5500, but it has now fallen below $4000, with a maximum intra-year drawdown of about 30%. With this kind of decline, leveraged players simply cannot hold on, leading to consecutive liquidations and even losses exceeding margin. As the clearing party, banks face excessively large risk exposures. Coupled with regulators continuously tightening rules on retail derivative trading, banks have opted for a blanket approach—high costs, frequent disputes, and unprofitability mean they are simply exiting this business.
However, it's important to note that what banks are closing is the "leveraged channel," not the "gold channel."
Accumulated gold plans, physical gold bars, and gold ETFs are all unaffected. Translated, this means banks are not prohibiting gold investment; they are prohibiting borrowing money to trade gold with leverage.
So the question arises: At this current juncture, is gold still a viable investment?
Looking at the short term, gold prices are indeed still in a corrective phase. The Federal Reserve's hawkish expectations are still developing, and the market's pricing for a Fed rate hike this year still has room to be revised upward. The short-term strength of the US dollar directly suppresses gold's performance, and short-term market sentiment is indeed bearish.
But if we look at the long term, the three major logics supporting a rise in gold are still intact.
First, US debt expansion. Federal debt has reached $40 trillion, with interest payments exceeding military spending. The long-term trend of US dollar credit depreciation is irreversible. Gold's value as the "ultimate currency" anchor will only grow stronger.
Second, global de-dollarization. Central banks worldwide have been frantically accumulating gold in recent years, with the People's Bank of China increasing its holdings for 18 consecutive months, followed by Poland, India, and Turkey. Global central bank gold purchases in 2025 hit the second-highest level in history. This is not a short-term action but a structural shift in reserve assets.
Third, geopolitical uncertainty. The situation in the Middle East, the Russia-Ukraine conflict, trade frictions... none of these variables have disappeared; they are just in a phase of temporary easing that has led the market to overlook them for now.
To put it plainly, the underlying logic supporting higher gold prices has not changed. The current gold price below $4000 is more a result of excessive short-term sentiment release rather than a reversal of the long-term trend. For ordinary investors, this is precisely a configuration window worth paying attention to.
So, after banks close leveraged gold trading channels, how should individual investors actually allocate gold assets?
The optimal answer is gold ETFs—this is what I consider the most suitable choice for the majority of people. Because gold ETFs perfectly solve three problems: low fees, good liquidity, and high tracking accuracy. You can buy and sell directly in your stock trading account, as conveniently as trading stocks, with no leverage risk and no fear of losses exceeding your margin.
If I had to choose among the many gold ETFs, I would focus on ChinaAMC Gold ETF (518850).
The reasons are practical—its fee rate is among the lowest for similar products, with a latest fund size of 14.6 billion yuan and an average daily trading volume close to 500 million yuan, indicating both good scale and liquidity. In terms of tracking error, ChinaAMC Gold ETF tracks the Au99.99 spot price with a high degree of correlation to the gold price and a small tracking error. Fund manager Rong Ying has managed it since its inception in 2020, bringing rich experience and stable operation.
If you don't have a stock trading account, the feeder funds for ChinaAMC Gold ETF (Class A 008701, Class C 008702) can be directly purchased on major fund sales platforms with a very low threshold.
Finally, it's worth stating that banks closing leveraged gold trading channels, while a bearish sentiment in the short term, is actually a good thing in the long run. It clears out the speculators who were gambling on price movements with leverage, allowing gold investment to return to its essence of "asset allocation."
Gold was never a tool to make you rich overnight; it is the ballast in your investment portfolio.
What you should do now is not panic, but find a gold ETF tool with low fees, good liquidity, and ease of use, then buy in batches or adopt a dollar-cost averaging strategy for long-term holding.
Comments