Driven by ongoing geopolitical tensions, the international precious metals market continued its volatile trend after opening on March 3. As of 9:05 AM that day, COMEX gold futures rose 1.23% to $5,369 per ounce, while COMEX silver futures climbed 2.78% to $91.325 per ounce. The previous trading session had already witnessed dramatic swings: COMEX gold once fell below the $5,310 mark before closing at $5,335.9 per ounce, while London spot gold dropped under $5,300 and settled at $5,321.43 per ounce. Silver markets experienced even sharper fluctuations, with COMEX silver falling over 7% intraday and closing at $89.61 per ounce, down 3.95%. London spot silver saw a maximum decline exceeding 4%, finishing at $89.263 per ounce with a 4.8% drop.
Market observers generally believe that geopolitical tensions tend to drive capital toward defensive assets like gold and U.S. Treasuries, highlighting gold's role in hedging systemic risks and inflation pressures. However, in stark contrast to strong retail demand, financial institutions are collectively issuing warnings. On March 2, Industrial and Commercial Bank of China cautioned clients that given recent intensification of international geopolitical risks and significant price volatility in precious metals markets, customers should closely monitor market changes, strengthen risk prevention, and trade rationally. On the same day, China Construction Bank also issued a notice advising investors to enhance risk awareness regarding precious metals businesses, make rational investments based on their financial situation and risk tolerance, properly control positions, and avoid following trends blindly. Postal Savings Bank of China and China Everbright Bank followed with similar warnings about extreme market volatility, urging investors to monitor their positions and margin account balances.
More notably, multiple banks had already taken substantive deleveraging actions prior to these warnings. Since late February, several major state-owned banks including Industrial and Commercial Bank of China, Agricultural Bank of China, and China Construction Bank have announced they would uniformly raise margin ratios for personal precious metals deferred contracts - such as Au(T+D), mAu(T+D), and Ag(T+D) - from 80% to 100%.
This adjustment effectively reduces leverage multiples for these contracts to zero, requiring investors to pay the full amount for transactions and significantly limiting speculative opportunities. Bank of Communications joined this adjustment on February 27, raising the margin ratio for relevant contracts to 100% starting from the settlement after market close on March 2. This marked the bank's second margin increase this month, following a previous adjustment from 60% to 80% on February 11. China Zheshang Bank announced that under extreme circumstances it might implement temporary market closures for its wealth gold accumulation business, suspending trading and physical redemptions.
Experts indicate that the core purpose of these risk control measures is to prevent potential liquidation risks arising from sharp price fluctuations within short timeframes. Xia Le, Chief Asia Economist at BBVA Hong Kong Branch, analyzed that when underlying asset prices experience substantial volatility, banks typically adjust leveraged trading parameters to protect retail investors. "Because in extreme market conditions, continued significant price movements could inflict substantial losses on investors who bought at peaks," Xia stated.
Looking ahead, Qu Rui, Senior Associate Director of Dongfang Jincheng Research and Development Department, noted that short-term gold price movements will heavily depend on the expansion scope of geopolitical conflicts, with any easing likely to quickly diminish the market's risk premium. Zhao Qingming, Vice President of the Foreign Exchange Management Research Institute, pointed out that from the perspective of U.S. dollar purchasing power, current gold prices appear relatively overvalued, and with most central banks slowing their gold purchasing pace, investors should avoid blind optimism about future trends.
