Bank of China Raises Minimum Purchase Amount for Gold Accumulation Program to 700 Yuan Amidst Soaring Gold Prices

Bank of China Raises Minimum Purchase Amount for Gold Accumulation Program to 700 Yuan Amidst Soaring Gold PricesOn February 7, 2025, Bank of China (BOC) announced on its official website that the minimum purchase amount for its gold accumulation program would be raised to 700 yuan (approximately $97 USD), effective February 10th. This follows several similar increases by other state-owned banks in 2024

Bank of China Raises Minimum Purchase Amount for Gold Accumulation Program to 700 Yuan Amidst Soaring Gold Prices

On February 7, 2025, Bank of China (BOC) announced on its official website that the minimum purchase amount for its gold accumulation program would be raised to 700 yuan (approximately $97 USD), effective February 10th. This follows several similar increases by other state-owned banks in 2024. The announcement specifies that the minimum purchase amount for both single purchases and the creation of regular investment plans is increased from 650 yuan to 700 yuan. The minimum additional purchase amount remains at multiples of 200 yuan, and existing investment plans remain unaffected.

This adjustment is not an isolated incident. Throughout 2024, multiple state-owned banks repeatedly increased the minimum purchase amounts for their gold accumulation programs. For example, BOC previously raised its minimum from 600 yuan to 650 yuan in September 2024; similarly, Construction Bank increased its minimum to 700 yuan from 600 yuan during the same period.

Industry insiders widely attribute these increases to the sustained rise in gold prices. Gold prices have been climbing steadily in 2025, reaching a historical high of $2883.16 per ounce on February 7th and briefly exceeding $2910.60 per ounce on February 8th. COMEX gold futures also hit $2886.80 per ounce on February 8th, representing a 1.83% weekly increase. The Shanghai Gold Exchange reported a closing price of 668.99 yuan per gram on February 7th, a 9% increase since the beginning of the year.

Banks have adopted various strategies in response to the rising gold prices. Besides increasing minimum purchase amounts, some banks have implemented dynamic mechanisms for their gold accumulation programs. For instance, Agricultural Bank of China adjusted its regular investment minimum purchase amount to fluctuate with the gold price in September 2024, while maintaining a 10 yuan increment. Similarly, Postal Savings Bank of China dynamically adjusts its minimum purchase amount since May 1st, 2024, based on market conditions, setting it above the previous month's average closing price of Au99.99 contracts on the Shanghai Gold Exchange, in multiples of 10 yuan. It's worth noting that according to the "Interim Measures for the Administration of Gold Accumulation Business" issued by the People's Bank of China in 2018, the minimum trading unit for gold accumulation products is 1 gram.

The surge in gold prices in 2024 stemmed from a complex interplay of factors. A veteran bank macro asset allocation consultant points to at least three major contributors: firstly, the Federal Reserve's move into a rate-cutting cycle, including a 50 basis point cut in September and policy uncertainty following the November election, fueled gold prices; secondly, geopolitical risks prompted a flight to safety into the gold market; and thirdly, continued gold reserve accumulation by central banks worldwide, exceeding 670 tons in the first three quarters of 2024, with particularly significant increases from emerging market economies like China and India, shifting demand from financial to monetary attributes. These factors continue to influence gold price trends in 2025.

Significantly, on February 7, 2025, the National Financial Regulatory Administration issued a "Notice on Conducting Pilot Programs for Insurance Fund Investment in Gold Business," allowing ten insurance companies to pilot gold investments. These companies can invest in gold spot contracts, deferred delivery contracts, centralized pricing contracts, on-request spot contracts, on-request swap contracts, and gold leasing businesses listed or traded on the Shanghai Gold Exchange's main board, primarily for long-term asset allocation. By the end of the third quarter of 2024, insurance companies held 32.15 trillion yuan in investable funds. The notice limits investment to a maximum of 1% of a company's total assets at the end of the previous quarter. Dongwu Securities estimates that this could unlock approximately 2 trillion yuan for gold investment. The large-scale entry of insurance funds is poised to significantly impact the gold market and further stimulate price increases.

However, market opinions on gold price trends are diverging. Goldman Sachs predicts gold prices will surpass $3000, while Xingye Research suggests that in the short term, gold valuations and technical indicators are overbought, and price consolidations typically follow quarterly gains of 10%, 15%, or 20%. The aforementioned senior investment consultant predicts an upward trend for gold in 2025, expecting strong overall performance but with short-term fluctuations, likely resulting in a fluctuating upward movement. The "2025 Bank of China Personal Finance Global Asset Allocation White Paper" also suggests that the long-term upward trend for gold is established from monetary, financial, and asset perspectives, but 2025 may still see some disruptive factors influencing short-term prices. The White Paper specifically notes that the Federal Reserve Chairman's public statement in early December that Bitcoin's competitor is gold, coupled with the new US president's support for Bitcoin development and its inclusion as a strategic reserve asset, will impact gold prices in the short term. However, the long-term correlation between Bitcoin and gold is positive, and Bitcoin's diversionary effect on gold is relatively limited due to its limited global acceptance and high volatility, rendering it incapable of replacing golds monetary attributes.

For individual investors, selecting appropriate gold investment products is crucial. A wealth manager from a state-owned bank advises that bank gold accumulation programs typically offer two options: one with flexible trading allowing for profit through buying low and selling high, but usually incurring a 0.5% transaction fee per trade; the other allows accumulation for later physical gold withdrawal, but with processing fees and minimum withdrawal amounts (often 10 or 20 grams) varying across banks. Investors should monitor market dynamics and invest according to their risk tolerance.

In conclusion, Bank of China's increase in the minimum purchase amount for its gold accumulation program directly reflects the sustained rise in gold prices and reflects the bank's expectation of future price trends. However, the future gold price trajectory remains uncertain. Investors should make cautious and rational investment decisions. While various market reports and expert opinions point towards a long-term upward trend for gold, short-term volatility persists. Investors should closely monitor market changes and make informed investment choices based on their risk tolerance, avoiding blind following of market trends. Selecting the right investment product is also crucial; investors should choose between flexible trading and physical withdrawal options based on their needs and risk tolerance, implementing appropriate risk management strategies. Finally, it is crucial to remember that all investments involve risk, and investors should make cautious decisions, avoiding impulsive buying or selling. Instead, they should create sound investment strategies, diversify their portfolios, and manage risks effectively to achieve stable long-term returns. Gold, as a significant investment asset, is subject to various influencing factors, demanding thorough market understanding and risk assessment for informed decision-making.