Gold prices fluctuate as banks raise the threshold for gold trading again

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Source: Beijing Business Today

Since late March, the gold market has bid farewell to one-way upward momentum and entered a period of consolidation and pullback. The week-over-week swing in international gold prices has hit the highest level in recent years, at one point erasing the gains for the full year of 2026. Faced with violent price fluctuations and rising liquidity pressure, on March 24, a Beijing Business Today reporter noticed that some banks have “taken action” to adjust precious-metal trading rules by raising the gold bid-ask spread and optimizing their quote models to lift the trading threshold. Industry insiders said that expanding spreads is a risk rebalancing measure to cope with market volatility. On one hand, it can cover hedging and operating costs driven by price swings; on the other hand, it can ease liquidity-management pressure triggered by high-frequency trading. For investors, during periods of high volatility in gold prices, they should abandon high-frequency speculation, reduce trading frequency, and—viewing gold from an asset-allocation perspective—as a medium- to long-term hedging tool, while reasonably controlling position sizes and avoiding the risk of short-term market fluctuations.

Some banks have raised the fees for gold accumulation

Recently, gold prices have fluctuated sharply, and market trading risk and liquidity pressure have increased. On March 24, a Beijing Business Today reporter noted that some banks offset the risk of price volatility and curb short-term speculative behavior by raising the trading threshold.

The reporter learned from China Merchants Bank that, so far this year, gold price volatility has increased noticeably. To adapt to changes in the market and to safeguard trading while covering operating costs, the bank adjusted the trading transaction spread between the buy and sell prices for gold account business starting at 9:10 a.m. on March 23. The spread was raised from 3 yuan/gram to 5 yuan/gram. Specifically, the buy-side spread for gold account transactions increased by 2 yuan/gram, while the sell-side spread remained unchanged.

A customer service representative from China Merchants Bank said that this spread-model adjustment is expected to run until June 27. Starting from the opening of June 29, the spreads on both the buy and sell sides will be adjusted to 2.5 yuan/gram, respectively. This also means that subsequent trading rules will be more balanced: the fee (spread) for investors on buy transactions will be 2.5 yuan/gram, and on sell transactions it will also be 2.5 yuan/gram—so the combined spread remains 5 yuan. Assuming the current base quote for a gold account is 980 yuan/gram, before the adjustment, the gold account spread was 3 yuan/gram; the investor’s buy price would be 983 yuan/gram. After the adjustment, the spread rises to 5 yuan/gram, making the buy price 985 yuan/gram. The cost of buying gold for investors will therefore increase.

Raising the spread on precious-metals trading is not a one-off case. Not long ago, Jiangsu Bank also issued a similar adjustment announcement. The bank said that recently, gold prices have become more volatile and market liquidity risk has correspondingly risen. With the premise of keeping trading duration as stable as possible, it will make appropriate adjustments to its quoting model and trading time. The Jiangsu Bank mobile banking app shows that, currently, the buy-sell spread for the bank’s personal gold accumulation business is 2.4 yuan/gram. The bank stated that starting from 20:00 on March 19, it will adjust the buy-sell spread for gold accumulation in a timely manner based on fluctuations in international and domestic gold prices and market liquidity conditions. The spread is not fixed. In addition to the buy and sell transaction fees charged by the bank, any additional buy-sell spread caused by gold price volatility and market liquidity will result in a situation where the buy-sell spread after adjustment is ≥ the buy-sell transaction fee.

For example, in the period from January 1 to March 31, the buy-sell spread for gold accumulation transactions: Jiangsu Bank collected buy-sell transaction fees totaling 2.4 yuan/gram. From April 1 to December 31, it collected buy-sell transaction fees totaling 2.8 yuan/gram. The portion exceeding that is not the bank’s fee; it is the buy-sell spread caused by factors such as market liquidity. Jiangsu Bank said that because factors such as gold-market price volatility and market liquidity can affect the bank’s buy and sell quotations for gold accumulation, the bank has the right to adjust the buy-sell spread in real time based on the factors above, and will no longer provide advance announcements for spread adjustments.

Regarding banks’ behavior of raising gold trading spreads, Gao Zhengyang, a specially invited research fellow at Sushang Bank, analyzed that raising bank gold spreads is a rebalancing measure to respond to market changes. On the one hand, gold prices have seen a notable increase in volatility recently. By expanding spreads, banks cover risks arising from price fluctuations and the associated hedging costs. On the other hand, if customers’ trading frequency rises and short-term speculative behavior intensifies, the liquidity-management risks banks face will also increase. Raising spreads is also intended to suppress market speculation.

Investors should give up high-frequency trading models

A trading spread is the difference between a bank’s buy price and sell price. It is also the actual trading cost incurred by investors who participate in gold account and gold accumulation services. A Beijing Business Today reporter looked up gold spreads across multiple banks and found that currently, there are significant differences in spread settings within the industry. Among them, the Bank of China’s gold spread is 14.6 yuan/gram; the China Construction Bank is 6 yuan/gram; and Minsheng Bank is 3 yuan/gram.

The differences in spreads essentially reflect the banks’ different judgments about market risk and operating costs. A bank insider said that in periods when gold prices are steady and liquidity is ample, banks typically keep spreads at a relatively low level to attract investors to trade. But when gold prices swing dramatically and market uncertainty surges, banks need to expand spreads to hedge the exposure risk caused by price volatility, covering both hedging costs and operating expenditures.

For investors, the most direct impact of a spread increase is higher trading costs. A bank gold account investor who has held positions for two years said frankly that they originally planned to add to their holdings when gold prices fell, but after the spread adjustment the cost increased noticeably. Their short-term trading plan could only be put on hold temporarily, and they shifted to observing the market. However, some long-term investors said they understand. They believe that if one holds long-term and does not trade frequently, the selling stage is unaffected, and even if short-term buy costs rise, it remains within an acceptable range.

From the perspective of market conditions, since late March, the gold market has moved away from the earlier one-way rally and has entered a phase of consolidation and sharp pullbacks. Influenced by factors such as the Fed’s hawkish statements and the rebound in inflation expectations, international gold prices repeatedly fell below key levels. The week-over-week swing hit a record high in recent years, at one point erasing the full-year gains of 2026. As of 18:50 on March 24, spot gold was quoted at 4419.92 US dollars per ounce, with an intraday gain of 0.29%.

“The core reason behind the recent intensification of gold price volatility is that rising crude-oil prices are pushing up inflation expectations. Meanwhile, expectations of a Fed rate cut have cooled, and the US dollar index has strengthened, putting pressure on gold prices. In addition, ongoing geopolitical conflicts have kept disturbing global markets, causing volatility across various asset classes to widen. Gold had previously experienced a long period of strong gains, leaving the market with substantial unrealized profits; some funds may choose to sell gold to obtain liquidity, further amplifying gold price volatility.” Gao Zhengyang advised that investors should focus on how the rise in transaction costs erodes the structure of returns. When spreads expand, they raise the cost of initiating positions; once investors enter the market, the immediate unrealized loss also increases, and the short-term trading break-even point for profit and loss is pushed higher as well. In a market environment where gold volatility intensifies, investors are more likely to frequently cut losses and see funds continue to be drained. Therefore, investors should abandon high-frequency trading patterns, reduce trading frequency, and—starting from the core perspective of asset allocation—assess gold’s role as a medium- to long-term allocation tool to diversify and manage investment risks, while reasonably controlling position sizes.

Beijing Business Today reporter Song Yitong

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