Gold Prices Continue to Fluctuate, Expected Yields Lowered on Some Gold-Linked Deposit Products

【Global Finance Comprehensive Report】Recently, the expected returns of several banks' structured deposit products linked to gold have decreased compared to before, with even cases of inverted yields. Industry insiders analyze that changes in gold price fluctuations and the overall downward trend in interest rates are the main reasons.

On May 26, information released by Bank of Jiangsu Wuxi Branch on its gold-linked structured deposit products showed that the expected annualized returns for 3-month and 6-month terms were 1% or 1.8% or 2%; the 1-year term product had an expected return of 1.1% or 1.75% or 1.95%, resulting in an inverted yield curve by term. In March to April this year, the same series of 3-month and 6-month products offered expected yields of 1% or 1.9% or 2.1%.

According to the China Merchants Bank App, at the beginning of this year, the bank's 7-day bullish and 14-day bullish gold-linked structured deposits had expected maturities of 1% or 1.38% or 1.55%. For the products issued on May 25 under the same terms, the expected maturity annual rate had fallen to 1% or 1.18% or 1.38%.

Xue Hongyan, a special researcher at Soochow Commercial Bank, stated that the root cause for the lower expected returns of such products lies in a significant shift in gold price fluctuation patterns, forcing banks to reduce the range of floating returns when designing new products. Yield curve inversion reflects pricing uncertainties regarding medium- to long-term gold prices, or that banks' liquidity management is tending toward short-term capital. Yang Haiping, a researcher at the Shanghai Finance and Law Research Institute, pointed out that after mid-May, gold prices corrected slightly; the market is cautious regarding the short-term trend of gold, and combined with the overall downward trend in interest rates, this is affecting the pricing of structured deposits.

Experts remind investors to pay attention to the minimum guaranteed yield, carefully check trigger terms, and avoid focusing solely on the highest potential yields when making decisions. At the same time, note that structured deposits usually have lock-in periods, so choices should be made rationally according to plans for the use of funds. (Reported by You Zheng)

Editor: Zhu Henan