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Several major Chinese banks have increased the minimum investment requirements for their gold accumulation plans in response to the recent volatility and sharp price swings of precious metals over the past month.
On November 15, China Citic Bank and China Construction Bank announced they had raised the monthly minimum investment limits to CNY1,500 (approximately USD211.30) and CNY1,200 (around USD169) from the previous threshold of CNY1,000 (about USD140.90).
Gold prices have surged more than 60 percent this year up to November 12. For example, on November 13, the price hit a high of USD4,244.94 per ounce, the highest since late last month. However, the close that day was USD4,171.22, and the following day saw a decline of 2.1 percent to USD4,082 per ounce.
Experts suggest that this collective move by banks to raise investment barriers in gold accumulation plans reflects increased investment risks associated with gold’s elevated prices and heightened volatility. Lou Feipeng, a researcher at the Postal Savings Bank of China, noted that these measures aim to adapt to market risk fluctuations and prevent irrational inflow of funds by tightening entry requirements and refining trading rules.
Gold accumulation plans enable customers to build their holdings through regular monthly investments based on weight or value, with options for physical gold withdrawal or cash redemptions. These plans had previously been popular due to their low entry barriers and the ability to redeem physical gold.
However, since prices have consistently hit record highs this year, several banks—including the Bank of China and Industrial and Commercial Bank of China—have increased their investment thresholds to better manage liquidity and risk exposure. Dong Ximiao, chief researcher at Merchants Union Consumer Finance, explained that higher thresholds and redemption restrictions help identify customers with stronger risk tolerance, prevent large redemptions during market swings, and ensure business stability.
Most financial institutions maintain optimistic long-term perspectives on gold, with some strategists predicting prices could reach a record of USD5,000 per ounce within the next two years.
Additionally, analysts from GAIN Capital Holdings highlighted that global hedging demand is unlikely to decrease significantly due to ongoing fiscal deficits and rising debt levels in the United States, as well as in other developed economies like Japan, France, and the UK.
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