China restricts retail gold trading to curb market speculation

China has implemented new restrictions on retail gold trading as the People's Bank of China (PBoC) moves to curb domestic speculation following a period of record-high prices. The measures, which target commercial banks and retail investment platforms, aim to reduce financial risk as Chinese investors surged into the bullion market amid a weakening property sector and volatile stock performance. Retail investment limits and banking shifts Major Chinese lenders, including the Industrial and Commercial Bank of China (ICBC) and Bank of China, have adjusted their requirements for gold-linked products. According to reports from the Shanghai Gold Exchange (SGE) on Sunday, 26 July, margins for physical gold contracts have been raised, effectively increasing the cost for retail traders to maintain positions. Several banks have also suspended the opening of new accounts for specific gold-linked investment vehicles. The restriction comes after China’s gold consumption reached 308.9 tonnes in the first quarter of 2024, representing a 5.9% year-on-year increase. However, the premium for gold in Shanghai over London prices has narrowed recently, suggesting that the curb on retail activity is cooling domestic demand. Global gold prices, which touched highs above $2,400 per ounce earlier this year, are now sensitive to these shifts in the world's largest consumer market. Impact on global bullion liquidity The move by Beijing is driven by the need to prevent a "gold bubble" that could…