In March, repeated geopolitical conflicts combined with tightening expectations for Federal Reserve interest rate cuts have pulled gold prices into a tug-of-war between inflation hedging and safe-haven demand. The traditional safe-haven characteristic has diminished, while the risks of leveraged trading continue to amplify.

On March 19, the international spot gold price fell below the $4600 per ounce mark, bringing the cumulative decline for the month to over 13%.

Against this backdrop, domestic banks have collectively tightened their agency services for individual precious metal trading on the Shanghai Gold Exchange, signaling a critical move in market risk control.

Since the beginning of March, multiple institutions including China Minsheng Bank, Postal Savings Bank of China, and Ping An Bank have issued frequent notices urging existing clients to close positions, withdraw funds, or terminate agreements by specified deadlines. Some have explicitly stated that they will gradually shut down agency services for individual precious metal trading on the exchange.

Industry experts pointed out that the recent sharp fluctuations in precious metal prices have increased the risk of margin calls in leveraged deferred trading. This has also led to expanding risk exposure for banks when covering client losses. On the other hand, agency commissions from these businesses are limited, further squeezing banks' profit margins. Considering the mismatch between risk and return, more banks are expected to follow suit in tightening or even terminating such services as an industry trend.

Banks are collectively urging account closures.

On March 17, Postal Savings Bank of China announced the suspension of its agency services for individual precious metal trading on the Shanghai Gold Exchange.

The bank stated that if clients fail to complete required operations by March 27, 2026, it will forcibly close positions or sell holdings to protect account security and client interests. Funds from forced liquidations or sales will be automatically transferred to the client’s linked settlement account.

China Minsheng Bank issued a similar notice on the same day, urging clients to terminate agreements and close accounts. The bank emphasized that due to extreme volatility in the precious metals market, it is reminding clients who have not yet terminated their agreements to close deferred contracts, sell holdings, withdraw funds, and terminate services as soon as possible. Minsheng Bank will continue to advance the process of terminating agency precious metal accounts. The bank had previously announced on January 17, 2023, that it would terminate agency services for clients without spot holdings or deferred positions starting from February 1, 2023, with client margins automatically returned to their linked accounts.

Ping An Bank also announced on March 11 that it will gradually shut down its agency services for individual precious metal trading on the Shanghai Gold Exchange starting April 1, 2026. Additionally, the bank raised the margin requirement for Au (T+D), mAu (T+D), and Ag (T+D) contracts to 100% after the market close on March 11.

Industry analysts view the 100% margin requirement as effectively removing leverage, which reduces the risk of margin calls during extreme market volatility. It also alleviates banks’ potential burden of covering client losses.

Earlier, in late February, Agricultural Bank of China, Industrial and Commercial Bank of China, and China Construction Bank also raised margin requirements for related precious metal contracts from 80% to 100%.

Data show that since the fourth quarter of 2025, at least 13 banks—including state-owned, joint-stock, and city commercial banks—have tightened agency services for individual precious metal trading on the Shanghai Gold Exchange.

According to Wu Zewei, a special researcher at Jiangsu Suning Bank, this trend is driven by a combination of market risk, low business profitability, and regulatory compliance requirements. He explained that volatile precious metal prices increase the risk of margin calls in leveraged deferred trading. Individual investors often lack strong risk management capabilities, and as member units, banks are responsible for covering losses, leading to expanding risk exposure.

From a business perspective, agency commissions from precious metal trading are limited, yet banks must invest significant resources in risk control and compliance management, further squeezing profit margins. Additionally, growing regulatory emphasis on investor protection requires banks to invest more in investor education and risk monitoring. Wu noted that this imbalance between risk and return has prompted banks to reassess the value of these services and proactively scale back to prevent potential risks.

More banks are expected to follow suit.

Wu Zewei believes that more banks will likely tighten or terminate similar businesses in the near future.

He stated that industry demonstration effects will push more institutions to reassess the value of such services and gradually exit the sector. In the future, individual precious metal businesses are expected to feature reduced leverage until it is eliminated entirely, a shift from trading channels to asset allocation services, and stricter investor suitability requirements. This will guide investors toward long-term asset allocation rather than short-term speculative trading.

Investors are advised to closely monitor bank announcements and promptly close positions and withdraw funds as instructed. Lou Feipeng, a researcher at Postal Savings Bank of China, suggested that for gold investment, individuals should consider gold as part of a long-term asset allocation strategy. Options include physical gold, gold accumulation plans, and gold ETFs, while avoiding leveraged trading. Investors should also scientifically assess their risk tolerance and avoid using borrowed funds for investment.

Wu Zewei also recommended that individual investors with ongoing interest in gold consider physical gold, gold accumulation plans, or gold ETFs as part of a long-term portfolio. They should evaluate their risk capacity carefully and avoid using non-owned funds for gold investments. Gold ETFs, due to their convenience, low fees, and high liquidity, are expected to become a popular alternative for many investors.

At present, after a rapid price surge, gold is trading at historically high levels. Short-term volatility is likely, and there is pressure for a price correction. Investors should remain fully aware of these risks.