On July 18, China Construction Bank announced that it will suspend the purchase of gold and silver in the account precious metal business. Previously, China Construction Bank has suspended the newly opened positions of the deferred contract varieties of the agency personal precious metal trading business. Since the beginning of this year, many commercial banks have tightened the precious metal business due to the increased risk in the precious metal market. Institutional research reports believe that due to factors such as the market’s increased expectations of a global recession, the decline in crude oil prices, and the Fed’s interest rate hike, precious metal prices are under pressure and downward. At present, the upward pressure still exists, and the overall future trend may be bearish.
Suspend buying, increase margin ratio, many banks tighten precious metal business
In the announcement, China Construction Bank stated that from 7:00 on August 15, 2022 (Monday), Beijing time, the purchase of gold and silver in the account precious metal business, the conversion transaction and the setting and change of the fixed investment plan will be suspended; account precious metals will be suspended. Two-way trading business Gold and silver short positions; the set account gold, account silver, and account platinum fixed investment plans will be automatically terminated.
(Screenshot from China Construction Bank website)
Earlier on June 2, China Construction Bank also stated that from 15:30 on June 17, 2022 (Friday), Beijing time, it will suspend the agency of the Shanghai Gold Exchange’s personal precious metal trading business to open new positions in deferred contracts. Transactions and closing transactions are not affected; the purchase transaction of spot contract varieties is suspended, and the sell transaction is not affected.
Coincidentally, on July 15, ICBC issued an announcement stating that from 8:00 on August 15, 2022 Beijing time, account gold and account silver business opening transactions will be suspended. It will automatically expire, and the closing transaction of the customer who holds the position will not be affected. In addition, the customer service of ICBC introduced to the reporter from the Central Broadcasting Network that at present, the bank has suspended the opening of new accounts for precious metal trading accounts, and suspended account opening transactions for palladium and platinum.
A reporter from the Central Broadcasting Network found that in addition to China Construction Bank and Industrial and Commercial Bank of China, many commercial banks such as China Everbright Bank, Huaxia Bank, and Industrial Bank have also tightened their precious metal business since the beginning of this year. Specifically, in addition to suspending buying transactions, the tightening measures also include lifting the principal-agent relationship and increasing the margin ratio.
For example, Industrial Bank announced on June 7 that individual customers can apply through the bank’s outlets before the market closes at 15:30 on July 15, 2022 to cancel their personal precious metal trading entrustment with the bank as an agent for the Shanghai Gold Exchange. relation. The bank will clear the trading accounts of individual customers who have no transactions, no positions, no inventory, and no arrears in the past year after the market closes at 15:30 on July 15, 2022, and terminate the agency relationship.
Hua Xia Bank issued an announcement on May 5 to adjust the precious metal trading business for individual clients. The margin ratio of N1), Au(T+N2), NYAuTN06, NYAuTN12 contracts is adjusted from 15% to 30%, and the margin ratio of Ag(T+D) contracts is adjusted from 19% to 35%.
Institutions with increased risk in the precious metal market: the future trend is still bearish
Why are major banks tightening precious metal-related business? China Construction Bank said that this was due to the recent increase in the volatility of the precious metal market, and the move was to comply with market changes and protect the rights and interests of investors. ICBC mentioned in the announcement that considering the uncertainty of the international bulk commodity market, for customers with outstanding positions, it is recommended to carefully control the size of their positions and pay attention to preventing and controlling their own risks. Everbright Bank, Hua Xia Bank, Industrial Bank, etc. have also prompted the risk of fluctuations in the precious metal market.
A reporter from the Central Radio Network noticed that on July 6, the Shanghai Gold Exchange issued the “Notice on Doing a Good Job in Recent Market Risk Control”. According to the Shanghai Gold Exchange, recently affected by international factors, global commodity prices have fluctuated sharply, and market risks have significantly increased. All member units are requested to improve their awareness of risk prevention, carefully prepare risk emergency plans, and remind investors to do a good job in risk prevention, reasonably control positions, and invest rationally. The Exchange will take appropriate risk control measures according to market conditions to prevent market risks, maintain market stability, and protect the interests of investors.
Market data shows that the price of precious metals has fluctuated and declined recently, and the price of gold and silver has fallen endlessly. Since March, COMEX gold has fallen below the $2,000/oz, $1,900/oz and $1,800/oz mark, and has now fallen to around $1,707/oz, and COMEX silver has also fallen from a high of $27/oz to $18.7/oz around USD/oz. In addition, futures prices such as palladium and platinum also fell.
The Galaxy Futures Research Report pointed out that due to the market’s stronger expectations of a global recession, the decline in crude oil prices and the Fed’s interest rate hike, precious metal prices were under pressure. Bank futures said that although the price of precious metals has fallen sharply, from a technical point of view, the pressure above still exists. At present, the Fed is expected to raise interest rates by 75 basis points in July, which has slowed down the pressure on precious metals and held support. From a fundamental point of view, continuous interest rate hikes have strengthened expectations for inflation to fall, and economic recession expectations have made the market full of concerns about liquidity risks. Therefore, the price of precious metals will remain bearish overall in the future.
Everbright Futures believes that there are still many trading days from the current stage to the Fed’s July meeting on interest rates. Whether from a macro or technical point of view, it is still advisable to remain cautious about the possible rapid downward trend of gold. For some bullish investors pinning their hopes that gold may resume its rally after the most severe phase of U.S. monetary policy has passed, Everbright Futures pointed out that the above possibility exists, but there is a high probability that there will only be a rebound and no reversal, because the Federal Reserve does not There will be a clear signal of a slowdown in monetary policy to prevent inflation from picking up again.
(Editor in charge: Zhang Ziyi)
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