Since 2025, the international spot gold prices have been breaking historical records multiple times, aiming for the significant threshold of $3,000 per ounceAs the gold prices surged, a wave of enthusiasm for gold accumulation followed closely behind.

Compared to physical gold, gold accumulation accounts offer much more flexibility in terms of tradingInvestors can buy and sell instantly, making it easier to liquidate at any time during trading hours, which has garnered the interest of numerous investorsTaking advantage of this current uptrend in gold prices, several investors who have holdings worth millions have achieved returns over 10% through short-term trading, while long-term investors continue to make purchases.

In this context, as a warning for investors to remain vigilant regarding risks, many banks have adjusted their gold accumulation services, reducing gold account interest rates and raising investment thresholds.

Lower Interest Rates, Higher Investment Thresholds

A gold account is a banking service that tracks customers' gold-related transactionsCustomers can conduct both current and fixed-term gold transactions through these accountsBy engaging in buying and selling, clients can earn interest and profits while also able to withdraw physical goldTypically, gold account interest rates are referred to as personal accumulation gold rates.

According to an announcement from Citic Bank, the bank will adjust its personal accumulation gold fixed and current interest rates starting February 15, 2025. The current rate will drop from 0.35% to 0.15%, with annualized rates for 1-month, 3-month, 6-month, and 1-year terms dropping from 0.48%, 0.87%, 1.18%, and 1.38% to 0.25%, 0.40%, 0.60%, and 1.00%, respectively, with the highest decrease amounting to 58 basis points.

From February 12, 2025, the bank will adjust the interest rates for gold account services, with the annualized interest rate for current gold accounts changing to 0.01%, while the 3-month, 6-month, 9-month, and 1-year products will be adjusted to 0.1%, 0.1%, 0.2%, and 0.3% respectively.

China Merchants Bank's latest adjustments have seen reductions of up to 30 basis points

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Previously, their current, 3-month, 6-month, 9-month, and 1-year products had annualized interest rates of 0.10%, 0.30%, 0.40%, 0.50%, and 0.60% respectively.

In addition to lowering gold account interest rates, banks have also increased the purchase "threshold" for accumulating gold.

The Bank of China released an announcement on February 7 stating that, according to the People’s Bank of China's “Provisional Measures for the Management of Gold Accumulation Services,” it will raise the minimum purchase amount for gold accumulation products from 650 yuan to 700 yuan starting February 10, 2025, while maintaining the additional purchase amount at 200 yuan incrementsOn September 27, 2024, the Bank of China had already increased the minimum purchase amount from 600 yuan to 650 yuan.

Moreover, several banks, including Agricultural Bank of China, China Construction Bank, and others, have previously raised the starting purchase amounts for accumulation gold products, with adjustments ranging between 100 yuan and 120 yuan, now setting the minimum purchase amount between 650 to 700 yuan.

Short-term Fluctuations, Long-term Optimism

Gold prices can be volatile, and investments in gold accumulation products do not guarantee profitsWhile some banks have adjusted their starting points for gold accumulation, they have also informed investors about potential risks in investing.

On February 12, China Construction Bank issued a notice regarding market risk for precious metal transaction services, mentioning heightened volatility in both domestic and foreign precious metal prices, thereby prompting investors to increase their awareness of risks, manage their positions wisely, and keep informed about their holdings and margin balance changes.

China Merchants Bank echoed this sentiment in their announcement, urging investors to remain aware of market conditions and prioritize rational investments, and stated that they would adjust the trading spreads of gold account transactions based on market conditions.

Chief Strategy Analyst Yang Chao from China Galaxy Securities indicated that, in the short term, gold prices are expected to fluctuate at high levels, influenced by Federal Reserve policies and inflation data

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However, looking at a medium to long-term perspective, supported by risk hedging demands and economic uncertainties, the momentum for gold price increases remains intact.

According to research from Guosheng Securities, since late December 2024, international spot gold prices have risen from roughly $2,610 per ounce to nearly $2,942 per ounce, a rise of over 10%.

The report attributes this current uptrend in gold prices to three main factors: firstly, as expectations for a Federal Reserve interest rate cut rebound, both the US dollar index and treasury yields have stopped climbing and retreated, which is favorable for gold; secondly, rising uncertainties in global economies and geopolitical situations have heightened risk aversion; thirdly, a significant amount of gold has recently been flowing back to the US, which has led to a dramatic tightening of liquidity in London’s physical gold market, thus propelling gold prices upwards.

Guosheng Securities anticipates that gold will likely continue its upward trend in the medium to long term, but warns that replicating the steady rise seen in 2024 may be unlikely in 2025, with more probable outcomes being oscillating upward movementsThey advise investors to wait for favorable buying opportunities following price corrections and suggest against chasing highs in the short term.

At the same time, some institutions maintain a bullish outlook on gold in the long run.

For the entire year of 2025, Citic Securities remains firmly optimistic about goldThey have also indicated that in relation to the geopolitical situation in the Middle East, attention should be paid to the potential for unforeseen events that could further elevate gold prices.

Additionally, Yi Shen, the Chief Macroeconomic Analyst at Huatai Securities, expressed that while gold may face fluctuations due to multiple factors driving its recent appreciation, the point of losing the upward trend is far from being reached.

Yi concluded that as the recent trend of gold price increases comes to a temporary halt, fluctuations may be expected in the short term

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