Thursday, August 7, 2025

Latest

Is China Squeezing The Gold Market?

In response to recent trading price risks, the Shanghai Futures Exchange (SHFE) has implemented transaction limits on gold and copper futures, effective immediately. The move aims to regulate speculation and stabilize market conditions amid increasing volatility.

The daily opening position limit has been capped at 2,800 lots for gold futures and 2,000 lots for copper futures. This decision comes amidst growing concerns over the influence of speculative trading on price movements in these commodities.

However, observers are seeing more than what meets the eye. Eric Yeung on platform X (fka Twitter) said he talked to individuals from China shedding light on the underlying dynamics driving this regulatory action. The Shanghai Gold futures traded at the SHFE primarily represent a paper market, he wrote, while the Shanghai Gold Exchange (SGE) exclusively deals in physical gold. This demarcation underscores the difference between speculative trading and tangible asset transactions.

“The Chinese are imposing transaction limits on the SHFE because they don’t want the paper Gold market dictating a speculative paper Gold price to the SGE physical Gold only market during a [fear of missing out] buying frenzy (of course the two prices are correlated),” he elucidated.

He further noted that by restricting transactions on the SHFE, there may be a shift of liquidity towards the SGE’s physical gold market in the long term. This redirection could stimulate demand for physical gold, bolstering its role in the Chinese market.

On the other hand, with transaction limits in place, it is anticipated that the volume of gold contracts traded on the SHFE will decrease.

The move by Chinese regulators could also lead to an increase in demand for physical gold delivery from Western markets such as COMEX and London.

The most-traded SHFE gold contract soared to a new peak of $77.55 per gram, marking a 16% increase since the beginning of the year. Similarly, the most-traded SHFE copper contract surged to its highest-ever level of 76,860 yuan per metric ton on the same day.

According to a separate notice issued on Wednesday, the Shanghai International Energy Exchange (INE) is also set to enforce trading limits on crude oil futures contracts starting April 12. Under the new regulations, the maximum intraday position opening volume for each contract will be capped at 3,200 lots.


Information for this briefing was found via The Economic Times and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

Gold/Silver: People Can Still Lose Money In This Bull Market!? | Rick Rule

He Said $300 Silver!? | Peter Krauth

Dollar Will Collapse, Gold and Silver Are the Only Safe Havens | Jim Rogers

Recommended

Nova Scotia Bans Forest Access to Prevent Wildfires

Cardiol Therapeutics Releases Positive Topline Results From Phase II Clinical Trial

Related News

Trillium Gold Acquires Further Property Along NT Zone

The claims owned by Trillium Gold Mines (TSXV: TGM) appear to just keep on growing....

Monday, August 30, 2021, 08:26:11 AM

Biden Administration Bans US Advanced Tech Companies Receiving Fed Funding From Building Facilities in China

Last month, Congress approved a new plan to boost America’s dominance in technological advancement and...

Wednesday, September 7, 2022, 01:37:44 PM

Great Bear Releases Further LP Fault Results, Highlights 10.50 G/T Gold Over 13.1 Metres

Great Bear Resources (TSXV: GBR) this morning announced further results from its ongoing drill program...

Thursday, April 22, 2021, 08:03:56 AM

Capitan Mining Releases Final Results From Gold Drill Program

Capitan Mining Inc. (TSXV: CAPT) today reported results from its 2021 drilling program on the...

Thursday, May 20, 2021, 08:28:54 AM

iMetal Resources Begins Trenching At Flagship Gowganda West Project

iMetal Resources, Inc. (TSXV: IMR) today announced the commencement of trenching operations at its Gowganda...

Friday, July 9, 2021, 09:29:00 AM