Chinese banks lure investors with gold-linked deposits amid soaring prices

An increasing number of Chinese and foreign banks are launching gold-linked structured deposits to attract investors seeking higher returns tied to gold prices, which analysts say provide an alternative to poor returns from time deposits.

Rising gold prices, which continue to hit new highs this year, are fuelling renewed enthusiasm in gold as an investment in mainland China. While gold has increased 6 per cent this year to over US$4,620 an ounce, a Goldman Sachs forecast last month projected bullion to hit US$4,900 by December 2026.

Meanwhile, five major state-owned banks, including Bank of China and Industrial and Commercial Bank of China, currently offer 0.95 per cent on a one-year fixed deposit.

“Deposit rates have been continuously trending downwards, failing to meet investors’ demand for preserving and increasing the value of their assets,” said Fu Yifu, a special researcher at Su Merchants Bank based in Nanjing, Jiangsu province.

“Meanwhile, gold is a safe-haven asset, and its price movement has a low correlation to traditional assets such as stocks and bonds. When the global economy faces uncertainties, gold tends to be resilient.”