Chinese banks are accelerating efforts to scale back retail trading in precious metals, as sharp price swings in gold and silver increase concerns over leveraged losses among individual investors. Industrial and Commercial Bank of China, the world’s largest bank by assets, said it will stop offering individual trading services for precious metals linked to the Shanghai Gold Exchange after settlement on July 24. Existing clients have been advised to close their positions, liquidate holdings, or take physical delivery before the deadline.
ICBC’s move follows similar actions by Postal Savings Bank of China, Ping An Bank, and China Guangfa Bank, which have either suspended or are preparing to exit the same retail precious-metals trading market. China Guangfa Bank told clients to close their positions by Thursday afternoon or face forced liquidation by the end of the month.
The closures come after a dramatic reversal in gold prices. Spot gold recently fell below US$4,000 an ounce for the first time since November, extending its decline from a record high of nearly US$5,600 in January. That marks a decline of close to 30 percent from the peak. Gold had more than doubled over the previous two years, drawing strong retail interest. But the rally has since unwound as inflation concerns, expectations of higher-for-longer interest rates, and a stronger US dollar weighed on precious metals. Silver has also seen heavy volatility. Although it rebounded alongside gold in London, prices remain more than 50 percent below their earlier highs.
Banks have cited risk management as the main reason for shutting down retail precious-metals trading services. Some lenders have raised margin requirements to extremely high levels, with combined down payments reaching as much as 140 percent when bank requirements are added to Shanghai Gold Exchange charges. At those levels, investors must provide more collateral than the value of the trade itself, reducing the appeal of leveraged trading and limiting potential losses for banks and clients. New retail accounts linked to the Shanghai Gold Exchange have already been suspended since 2020. The latest actions mark a further tightening, as banks now move to close or wind down existing retail access.
The tougher stance on leveraged retail products can be traced back to the 2020 “Crude Oil Treasure” incident, when retail investors suffered major losses on Bank of China-linked products after oil futures unexpectedly turned negative. Since then, Chinese regulators and banks have become more cautious about offering complex or highly volatile investment products to individual clients. The precious-metals clampdown fits into a broader effort to limit speculative trading and protect retail investors from sudden market dislocations.
The Shanghai Gold Exchange itself continues to operate normally, especially for institutional participants and physical delivery. The restrictions target bank-intermediated retail trading products, particularly those involving leverage or deferred delivery contracts.
Although banks are pulling back from leveraged trading services, they are not discouraging gold ownership altogether. Instead, they are steering retail clients toward longer-term and lower-risk products such as physical bullion, gold accumulation plans, and exchange-traded funds.
ICBC and other banks have lowered risk ratings on physical bullion programs, including gold accumulation products, and some have reduced transaction fees to as low as 0.2 percent. These products allow investors to buy gold gradually over time rather than speculate on short-term price movements.
Retail investors can still buy physical gold through banks, jewelry shops, and bullion dealers. They can also invest in gold ETFs listed on Chinese exchanges, which provide exposure to gold prices without the same leverage risks.
Despite the near-term volatility, China’s long-term demand for gold is likely to remain resilient. China is the world’s largest consumer of the metal, and households have traditionally viewed gold as a store of value during periods of financial uncertainty, currency weakness, and market instability. Recent import data also showed the heaviest net inflow of gold bullion into China in more than two years, suggesting that physical supply remains strong. However, Shanghai gold prices have recently traded below London prices, indicating weaker short-term local demand relative to supply. This discount points to a cooling of speculative appetite, even as longer-term interest in gold savings and physical ownership remains intact.
The tightening of risk controls extends beyond precious metals. Chinese financial institutions are also taking steps to curb speculative inflows into overheated equity themes. China’s largest mutual fund manager has restricted new subscriptions into AI data center investment funds after some products surged more than 300 percent over the past year. Funds linked to co-packaged optics and data center hardware have drawn intense investor interest, prompting managers to slash new subscription limits to control risks. The parallel moves suggest a broader regulatory and institutional push to cool retail speculation in markets that have risen too quickly or become too volatile.
China’s banks are not turning away from gold. They are turning away from leveraged retail trading in gold. The latest restrictions reflect a market where risk controls are becoming more important after a sharp correction in precious-metals prices. While short-term speculative demand has weakened, the long-term case for gold ownership in China remains supported by household demand, savings culture, and the metal’s role as a store of value. The result is a reshaping of the retail gold market: less leverage, fewer speculative trading channels, and greater emphasis on physical bullion and long-term accumulation.
