China's Gold Trading Halt Adds Pressure on $4,000 Support Level

China's state-owned banks have halted retail trading of precious metal derivatives on the Shanghai Gold Exchange, forcing investors to shift towards physical bullion. This move is seen as a deliberate policy signal by Beijing to curb speculative paper trading and redirect demand toward bars and coins.

The ban covers popular contracts including Au99.99, Au100g, and Au99.95, which allowed individual investors to speculate on gold prices without taking delivery of the metal. Existing holders must either close their positions or accept physical settlement.

Market observers believe that this structural impact could prove supportive as physical demand tends to be stickier and less prone to violent price swings compared to paper speculation.

The $4,000 level is a critical support for gold, with futures oscillating between $4,023 and $4,039 per ounce on Friday morning. The metal had touched $4,150 just days earlier before reversing sharply.