China Merchants Bank raises gold account spread to 5 yuan/gram, customer service responds: to adapt to market conditions

Gold prices have been showing pronounced fluctuations, and banks have stepped in to adjust related businesses.

Recently, China Merchants Bank issued a notice regarding adjustments to the bid-ask spread for its gold account business. It said that, due to increased volatility in the gold market in recent times and to prevent related risks, starting from March 23, the bid-ask transaction spread at the same quotation time point for its gold account business will be adjusted to 5 yuan per gram. Of this, the spread on the buy side will increase by 2 yuan per gram, while the spread on the sell side will remain unchanged. The adjusted spread program is expected to run until June 27.

And starting from the market open on June 29, China Merchants Bank’s gold account business will adjust the spreads on both the buy and sell sides at the same quotation time point to 2.5 yuan per gram, respectively.

On March 24, a customer service representative from China Merchants Bank told a reporter from The Interface News: “This adjustment is to align with the market environment. At present, many peer institutions in the market have already raised the spreads for related businesses based on changes in the行情. Our gold account spread is still at a medium-to-low level among banks.”

So-called “spread” refers to the price difference between the buy price and the sell price when investors purchase allocated gold from a bank. According to Securities Times, specifically, if China Merchants Bank’s gold account business displays a price of 1000 yuan per gram, before the rules adjustment, at the same time point the customer’s buy price would be 1000 yuan per gram and the sell price would be 997 yuan per gram, with a (buy-sell transaction) spread of 3 yuan per gram. After the rules adjustment, at the same time point the customer’s buy price would be 1002 yuan per gram and the sell price would be 997 yuan per gram, with a (buy-sell transaction) spread of 5 yuan per gram.

China Merchants Bank’s spread adjustment comes amid intense volatility in the international gold market. On March 22, the London gold spot price fell below the $4500 per ounce mark, closing at $4491.67 per ounce, with a week-over-week drop of 10.49%. The data shows this is the largest single-week decline since March 1983. On March 23, international gold prices plunged even further, with an intraday decline of more than 8% at one point, marking the 9th consecutive day of decline.

On March 23, the Shanghai Gold Exchange (SGE) urgently issued an announcement stating that there are many factors recently affecting market instability, and that volatility in precious metals prices has increased significantly. Please have all member units closely monitor changes in market conditions, make detailed and effective risk contingency plans, and maintain stable market operations.

On March 24, gold prices were relatively steady. As of the time of the press release, it was quoted at $4401.68 per ounce, down 0.05%.

This year, multiple banks have already moved to adjust their precious-metals trading businesses. On March 3, China Construction Bank issued an announcement stating that, to further improve risk prevention and control, it will implement dynamic transaction limit management for its Construction Bank gold (including Yicun Gold).

An announcement from Industrial Bank dated February 3 shows that, according to the needs of business development, starting after February 14, the bank will close the personal online-banking transaction channel for individual precious-metals buy/sell businesses at the SGE; trading channels such as the counter and mobile banking will remain open normally.

Previously, Zhejiang Commercial Bank also announced that if abnormal price fluctuations occur in the gold market, market liquidity dries up, or the ability to handle transactions declines significantly, it may temporarily close its Wealth Gold accumulation business.

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