Chinese banks limit clients' access to gold, platinum and palladium trading
Chinese authorities are fighting the "gold rush" that has engulfed local speculators, Reuters reports. The country's largest banks are restricting clients' access to trade in gold and other precious metals for fear of a repeat of the April situation, when retail traders suffered large losses after WTI oil prices fell below zero.
This week, gold prices soared to record highs amid the collapse of the dollar, which attracted small speculators to the market. Now the leading banks in China are trying to cool their fervor in order to "control the risks".
ICBC, China's largest bank, announced yesterday that it had banned customers from opening new positions in platinum, palladium and index products tied to the precious metals. The ban will take effect from Friday, and the ICBC's customer service department said the decision was driven by "sharp price volatility" and "the need to control risks".
The Bank of China said it had recently suspended all gold transactions, while the Bank of China reported a ban on opening new accounts for platinum and palladium trading.
The Shanghai Gold Exchange said on Tuesday it was ready to take risk control measures to protect investors if necessary.
The Shanghai Futures Exchange, where gold and silver contracts are traded, also urged its members to strengthen risk management and act rationally.
In addition, Chinese investors are actively trading gold exchange funds (ETF), the turnover of which has increased sharply in recent weeks. Since the beginning of the year, the assets of Huaan Yifu (Asia's largest gold ETF) have increased by 68% (+11.8 billion yuan or US$1.69 billion).
Chinese regulators are well aware of the April events, when the collapse of WTI oil futures in May took local investors by surprise and caused them and their broker Bank of China serious losses. Subsequently, the bank agreed with half of its clients on the division of losses and took the losses of 6-7 billion yuan.