Gold Price Falls Over 10% Within the Month, Multiple Banks Intensively Contracting Precious Metals Businesses

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After a rapid rise at the beginning of the year, the gold market has recently entered a clear correction phase. In late March, international gold prices fluctuated around $4,600 per ounce, with a total decline of over 10% this month.

As price volatility increases, risk control at banks has become significantly stricter, and agency precious metals businesses are accelerating their contraction. Recently, many commercial banks have issued notices to systematically adjust their precious metals operations, involving raising margin requirements, restricting trading permissions, suspending new positions, speeding up account closures, and even exiting the business altogether.

Industry insiders say that under the combined effects of reshaping interest rate expectations and changing capital flows, the gold market and bank channels are entering a correction period simultaneously. Risk appetite and asset allocation logic are facing reassessment.

Banks Accelerate Tightening of Precious Metals Business

Amidst volatile gold prices, multiple commercial banks are tightening their agency precious metals services. On March 19, spot gold briefly fell below $4,600 per ounce during trading, with market volatility intensifying; on March 20, international gold prices continued to fluctuate. Against this backdrop, many banks issued notices to raise margin requirements, promote account closures, and even exit related businesses.

Specifically, Postal Savings Bank announced on March 17 that it would stop handling agency trading of Shanghai Gold Exchange personal precious metals transactions and required clients to close or sell their positions within a limited time; otherwise, forced liquidation and account closure would be enforced. On the same day, China Minsheng Bank reminded clients to complete account closures promptly, continuing the bank’s previous pace of reduction.

Earlier, Ping An Bank had clearly announced that it would gradually exit this business starting April 2026; Industrial Bank has shrunk its channels, closing some online trading portals and only maintaining counter and mobile banking operations. Meanwhile, some banks have “cooled down” trading activity by raising trading thresholds, widening spreads, and reducing limits, thereby lowering client trading frequency.

Since Q4 2025, more than ten banks, including joint-stock and city commercial banks, have successively adjusted their precious metals businesses. Some banks have suspended new client accounts, restricted purchase directions, or phased out existing clients.

In addition to trading activities, low-risk savings gold products are also being tightened. Some banks have set daily purchase limits, dynamically adjusted buy-sell spreads, and strengthened risk controls, with an overall tightening strategy.

Market volatility has become a “catalyst” for banks’ concentrated contraction of precious metals businesses. Wu Zewei, a special researcher at Su Commercial Bank, said that recent sharp fluctuations in gold prices make individual investors more prone to chasing gains and selling at losses, amplifying potential risks. Coupled with ongoing regulatory strengthening of investor suitability management and risk disclosure requirements, banks’ proactive contraction of business boundaries has become an inevitable choice.

In volatile markets, the mismatch between risks and returns in precious metals businesses is becoming increasingly apparent. On one hand, agency precious metals trading, especially leveraged deferred trading, carries the risk of margin calls. “In extreme market conditions, insufficient client margins may lead to larger losses, and banks, as clearing and channel providers, need to bear the responsibility of covering losses, passively increasing risk exposure,” said a banking insider.

On the other hand, this type of business has a relatively simple profit model, mainly relying on fees and spreads. However, increasing costs for risk control systems, compliance, and customer service are limiting overall profitability. Under stricter regulatory environments, the cost-effectiveness of these businesses is further declining.

Underlying Causes: “Unconventional” Decline in Gold Prices

The fundamental reason for banks’ contraction of precious metals businesses is a phase shift in the pricing logic of the gold market.

Recently, gold prices have shown some “unconventional” downward trends. Despite rising geopolitical tensions, gold has not continued its strong momentum but has instead continued to retreat. Since mid-March, spot gold has broken through several key levels, with market volatility significantly increasing.

Industry experts generally believe that the current phase has shifted from a risk-hedging logic to a rate-driven one. Rising tensions in the Middle East have pushed up crude oil prices, reinforcing inflation expectations and leading to the judgment that “high interest rates will persist longer.” In this context, U.S. Treasury yields and the dollar index have strengthened, exerting systematic pressure on gold.

“As a non-yield asset, gold faces higher opportunity costs in a high-interest-rate environment, with funds shifting toward dollar assets that generate returns. Additionally, the previous large gains have accumulated a lot of profit-taking, which during price corrections further amplifies the decline,” said Qu Rui, Senior Deputy Director of Research and Development at Orient Securities.

Furthermore, global liquidity is also tightening marginally. The dollar, with its dual role as a safe haven and yield asset, is diverting funds and weakening gold’s attractiveness.

Short-term Pressure, Long-term Support Remains

Despite increased short-term adjustment pressures, most institutions believe that the long-term logic for gold remains intact.

Qu Rui analyzed that in the short term, high oil prices and high interest rates will continue to suppress gold prices, and the market may remain volatile. However, as inflation gradually recedes, the Federal Reserve’s rate cut cycle, though possibly delayed, is unlikely to be absent, and the rate turning point will still support gold. Structurally, ongoing central bank gold purchases and the “de-dollarization” trend continue to provide long-term demand support. In the context of rising geopolitical uncertainties, countries still have incentives to diversify their foreign exchange reserves to reduce risk.

However, market divergence is widening. Some institutions believe gold prices may enter a longer-term consolidation phase; others think that if inflation rises again or geopolitical conflicts escalate further, gold could regain its safe-haven premium.

From an investment perspective, industry experts advise caution. Wu Zewei suggests avoiding blind bottom fishing in the short term, paying attention to signs of price stabilization; in the medium to long term, gold can be used as a hedge in asset portfolios, with controlled allocation ratios, and preference for low-leverage products like gold ETFs and savings gold.