Chinese banks have raised the risk classification for precious metal products, particularly physical gold, citing market volatility. According to Yicai Global, banks are actively discouraging new gold investments by halting account openings for these products. Existing investors can only close their positions but cannot add to them.
Recent fluctuations in gold prices highlight the risks. Comex gold futures surged over 28% in early November, then dropped 6.5%, followed by a rebound. To shield less experienced investors, banks have tightened risk controls, restricted trading access, and raised minimum investment thresholds.
Some banks are also reevaluating clients’ risk tolerance. For instance, China Construction Bank no longer allows conservative investors to trade specific gold products. Many institutions are phasing out high-risk investment products, keeping only those with lower risk profiles.
The gold market in China, the world’s largest, has seen a shift due to declining local demand. October’s gold imports via Hong Kong dropped 4.6% from the previous month and 43% year-over-year. Analysts cite sluggish jewelry sales and a weak domestic economy as key reasons for this downturn.
Retailers are feeling the impact. Leading jeweler Chow Tai Fook reported a 20.4% revenue decline in the first half of its fiscal year, citing weak consumer confidence and high unemployment. Similarly, Luk Fook’s revenue fell 27%, prompting store closures across mainland China and Hong Kong.
