The Chinese national flag and a banner of Industrial and Commercial Bank of China (ICBC) logo are seen waving in front of ICBC’s headquarters in Beijing. Photo: VCG

 
Postal Savings Bank of China on Monday announced it would suspend the opening of new accounts for spot precious metals trading, a move that experts said was aimed at curbing potential investment risks for its clients amid intense price fluctuations. 

According to a statement from the bank, it will suspend "all channels for new accounts" including mobile banking and personal online banking that allow precious metal trading on the Shanghai Gold Exchange. Existing accounts will not be affected. 

The bank did this to "further protect investors' rights and ensure the safety of their investment," the statement noted. 

About six weeks earlier, Industrial and Commercial Bank of China also changed the rules for its precious metal services, closing the business for certain clients due to "risks" in the sector.

The banks' moves to rein in precious metals trading came at a time when the metals' prices have seen intense fluctuations. In the trading week ending June 18, the Commodity Exchange (COMEX) gold futures slipped by 6.16 percent to $1,763.9 per ounce, the largest weekly fall since March 14, 2020. The COMEX silver futures also slipped by 8.18 percent that week. 

The price dip was a result of anticipation that the US Federal Reserve might raise interest rates soon, as well as a natural correction from earlier price surges, experts said. 

Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times that the banks might want to halt the business in case their relations with clients are damaged due to investment losses.

"Unlike stocks or other investment targets, precious metals are often considered as a safe option by Chinese investors, which means that their recognition of risks in the investment are insufficient," Xi told the Global Times.

He also said that many mainland banks had previously rolled out promotions for precious metals-related financial products to their clients in the past, but now they are worried that the risks could expand to an intolerable level.