This report (chinatimes.net.cn) reporter Li Minghui reports from Beijing

On the morning of June 26, international gold prices once again fell below the $4,000 per ounce mark, reaching $3,983 per ounce, a nearly 30% drop from the historical high of $5,594.82 per ounce set in January this year.

As gold prices plummeted, banks continued to upgrade risk controls, with several banks raising the margin ratio for precious metal futures contracts to 140%. China Construction Bank, Industrial and Commercial Bank of China, Ping An Bank, and Guangfa Bank issued announcements stating that they would cease to act as agents for precious metal trading on the Shanghai Gold Exchange and emphasized that they would forcibly close positions for clients with overdue open positions.

"When international gold prices fall below the $4,000 per ounce key level that the market is closely watching, it indicates that the multiple logics that previously supported high gold prices have loosened," said Yuan Shuai, deputy director of the Investment Department of the China Urban Development Research Institute, in an interview with the China Times. He noted that banks halting the agency business for precious metal trading on the Shanghai Gold Exchange is essentially a proactive measure to defuse risks before they fully spread, reflecting the banks' implementation of investor suitability management requirements and their responsibility for operational stability.

Cessation of Agency Personal Precious Metal Auction Trading Business

Recently, several banks announced the cessation of their agency business for personal precious metal auction trading on the Shanghai Gold Exchange (referred to as "SGE").

On June 25, China Construction Bank announced that to prevent business risks and protect investor rights, it would close the agency function for personal precious metal trading on the Shanghai Gold Exchange starting from the end of clearing on July 24 this year. The contracts involved include Au99.99, Au100g, PGC30g, Au (T+D), mAu (T+D), Ag (T+D), etc.

The bank reminded that after the business function is closed, if customers still have positions or spot inventory, the bank will execute inventory sell-off or forced liquidation operations on the relevant accounts at an appropriate time according to the relevant agreement terms, and the funds obtained will be automatically transferred to the signed account.

The day before, the Industrial and Commercial Bank of China also announced that it would cease to act as an agent for personal precious metal auction trading on the Shanghai Gold Exchange starting from the end of clearing on July 24. After the end of clearing, the bank will close the trading permissions for agency personal auction trading through mobile banking, online banking, and branch counters at an appropriate time. After the closure, the closing, selling, and delivery operation permissions for clients with positions will be restricted. At the same time, for clients without positions, inventory, or debts, the remaining funds in their margin accounts will be uniformly processed for batch withdrawal by the bank.

Ping An Bank and Guangfa Bank also recently announced that they would suspend such agency business at the end of June. On June 10, Ping An Bank announced that it would close the trading permissions for spot contracts (Au99.99 and Au100g) for personal precious metal trading on the Shanghai Gold Exchange after the end of clearing on June 30, 2026 (cut-off date) On June 22, Guangfa Bank announced that it plans to completely stop acting as an agent for individual precious metal trading on the Shanghai Gold Exchange by the end of this month.

In addition to halting related businesses, some banks have chosen to raise the capital threshold. Since June of this year, several banks, including Huaxia Bank, Guangfa Bank, China Merchants Bank, and Bank of China, have successively announced increases in the margin ratio for individual precious metal deferred contracts, with Guangfa Bank raising the margin ratio to 140%.

Experts: Banks Actively Mitigating Risks

According to Yuan Shuai, the banks' suspension of individual bidding transactions and repeated increases in margin ratios are essentially proactive measures to mitigate risks before they fully spread.

"When international gold prices fall below the key level of USD 4,000 per ounce, which is widely watched by the market, it indicates that the multiple logics supporting high gold prices have loosened." Yuan Shuai pointed out that the expectations for a delayed interest rate cut cycle by the Federal Reserve are continuously rising, and the strengthening of the US dollar index, combined with multiple factors, has rapidly amplified the volatility of gold prices. Previously relatively stable precious metal investments have suddenly turned into high-volatility varieties, while individual investors generally lack understanding of the leverage rules and price influencing factors in precious metal trading. Many participants entered the market with expectations of long-term gold price increases and have very low risk tolerance for short-term pullbacks. Once gold prices experience an unexpected decline, there is a high risk of margin calls. Not only do investors themselves have to bear additional losses, but banks, as agents, also face a large number of customer complaints and even have to bear some credit risks. At this time, proactively halting new agency businesses and forcibly closing existing overdue positions is essentially a proactive measure to mitigate risks before they fully spread. This reflects the banks' implementation of investor suitability management requirements and is a choice to be responsible for their own operational stability.

Wu Zewei, a special researcher at SuShang Bank, also stated in an interview with the China Times that banks are compressing trading leverage by raising margin requirements to avoid the risk of margin calls in extreme market conditions. Such adjustments can constrain irrational speculative behavior while balancing the safety of investors' assets and the stable operation of bank businesses.

It is worth mentioning that the continuous contraction of individual precious metal trading businesses by banks has led many investors to believe that banks hold a bearish outlook on the future of gold.

In response, Yuan Shuai stated that this measure does not represent a fundamental change in financial institutions' judgment on the future trend of gold. Rather, it is more of a short-term risk prevention operation, not a denial of gold's long-term value.

"If there were truly a fundamental change in the judgment of the future of gold, we would see banks simultaneously reducing their own gold reserves and suspending all gold-related proprietary businesses, rather than just halting agency businesses aimed at retail customers. The logical starting points of the two are completely different." Yuan Shuai added that we should view this measure as a risk reminder from financial institutions to ordinary investors, reminding them that precious metal investments are not a guaranteed profit financial choice. During high-volatility periods, investors should fully assess their risk tolerance and not misinterpret it as a collective bearish signal from financial institutions regarding gold. If gold prices return to a reasonable range and investor education is effectively implemented, there may be a possibility of reopening such agency businesses. Short-term risk prevention measures never represent a denial of the long-term value of assets Reporters have noticed that Wall Street investment banks are lowering their gold outlook. Although the market expects gold prices to rebound after falling to USD 4,000 per ounce, some institutional analysts believe there is still room for further declines in gold prices over the next 18 months. The individual pointed out that the prospect of the Federal Reserve raising interest rates will push up real yields and put pressure on gold prices. At the same time, a potential crash in the stock market could also exert greater downward pressure on gold prices, as investors typically have to sell quality assets to meet margin call requirements during sudden sell-offs in the stock market