The Shanghai Gold Exchange is ratcheting up margin requirements on gold futures as ravenous demand sends bullion prices into uncharted territory, an official announcement revealed Friday.
With geopolitical turbulence fueling a global rush into the precious metal’s safe harbor, the exchange will lift margin rates to 9% from 8% on gold contracts settled after April 15. Daily trading limits will also be widened to 8% from 7% to allow for greater price swings.
The moves underscore the unrelenting appetite for gold as deepening conflicts stoke economic uncertainty and concerns over currency debasement. Investors have piled in, sending the June gold futures contract 17% higher in 2024 to 567.6 yuan per gram ($2,342 per ounce) as of midday Shanghai trading.
Spot gold blasted through records earlier Friday, hitting an astounding $2,389 an ounce as the Russian-Ukrainian war drags on and the U.S.-China rivalry intensifies over AI technology supremacy. With investor fear proliferating, many are renewing calls for a return to a modern global gold standard.
“The gold craving is turning insatiable – people are embarking on an enormously bullish frenzy that’s overriding typical risk precautions,” said Wang Ru, a precious metals analyst at Guotai Junan Securities. “These higher margin requirements are necessary circuit breakers for the fevered trading.”
While authorities aim to calm the emotional overcrowding, few expect the zeal to diminish until greater economic stability and diplomatic progress emerges to dampen gold’s swelling safe-haven credentials.
