(Yicai) Nov. 28 -- Several Chinese commercial banks have raised the risk classifications on their precious metal products, particularly for physical gold, thereby lifting the investment bar following heightened volatility in the market for the yellow metal.

The precious metal products now classified as higher risk are mainly physical gold investments, Yicai found. Banks have ceased opening new accounts for these products, and existing clients can only close positions, not increase them.

Gold prices are sensitive to global factors, including geopolitical tensions, interest rate policies, and inflation expectations. This year, Comex gold futures soared by more than 28 percent into early this month, then pulled back 6.5 percent, only to rebound soon thereafter. By hiking risk classifications, banks aim to protect less experienced or risk-averse retail investors from potential losses.

Chinese lenders are also phasing out investment products that track commodity futures markets, while enhancing risk control measures, and tightening investor access, Yicai learned from a banking sector insider. These measures include prohibiting new account openings, limiting trading to existing customers, raising risk classifications, and setting higher minimum investment amounts. Some banks are also asking investors to redo personal risk tolerance assessments.

China Construction Bank, for example, no longer allows customers whose personal risk tolerance rating is conservative and cautious to invest in certain physical gold products after it raised the risk classification.

Moreover, banks may wind down trading-type investment products for precious metals, keeping only those with relatively low-risk classifications, such as physical investments, the insider added.

Editors: Tang Shihua, Futura Costaglione