Bank Wealth Management: Gold Prices "Lose Stability" as Net Value Fluctuations Test Operational Capabilities

Recently, as international gold prices have become more volatile, the net values of some bank wealth management products linked to gold have experienced temporary declines. Previously regarded as both a hedge and a means to enhance returns, “Fixed Income + Gold” products are now facing new challenges brought by market fluctuations.

Industry insiders say that including gold in investment portfolios can indeed help diversify assets and strengthen portfolio resilience. However, gold itself is not a low-volatility asset. Especially amid recent multi-asset price linkages and gold price adjustments from high levels, short-term net value fluctuations of gold wealth management products have increased, forcing financial institutions to reconsider product design, issuance pace, and risk control measures.

Some Gold Strategy Wealth Management Products Experience Net Value Declines

Recent product performance shows that some gold strategy wealth management products have experienced net value declines.

“Most days previously saw small increases, but in recent days, the net value has been steadily decreasing. The change isn’t large, but it’s a bit unsettling,” said an investor who purchased gold strategy products through a bank channel. Another investor admitted that they previously viewed these products as “relatively stable with some volatility,” but the recent continuous declines have prompted them to reassess the risks.

For example, the “Congrong Jiuxi Tianli 180-Day Gold Strategy Enhanced Wealth Management Product” issued by Zhejiang Silver Wealth Management primarily holds fixed income assets as the base, with an overlay of gold strategy to boost returns. Looking at its net value trend, in early March, the net value remained stable around 1.0205 to 1.0208. After March 18, it declined consecutively, reaching 1.0177 by March 23, with a total decline of about 0.3% over the past week, and volatility significantly increased compared to earlier.

Similarly, the “BOCOM Wealth Management Jiying (Stable Gold) One-Year Holding Daily Open No. 1,” distributed by China Merchants Bank, also features a strong gold strategy component. Recently, its net value stayed around 1.0780 in early March, then declined consecutively from March 18 onward, reaching 1.0734 by March 20, showing a pattern of oscillating decline over the past week.

Gold Is Not a Low-Volatility Asset

From an asset allocation perspective, gold has a weak correlation with major assets like stocks and bonds, offering strong diversification benefits. However, in practice, low correlation does not mean low volatility.

CICC research reports estimate that, based on daily data from 1971 to 2025, gold’s volatility is about 19%, roughly comparable to the Nasdaq 100 and higher than MSCI developed markets and emerging markets stocks. This indicates that, although gold is often seen as a safe haven during extreme risk events, it is not a smooth asset. Since the Middle East geopolitical conflicts, gold prices have not only failed to rise unilaterally but have also experienced increased volatility and even phased declines. This underscores that gold prices are influenced by multiple factors, including the US dollar, interest rates, geopolitical risks, and trading sentiment.

Tian Lihui, a finance professor at Nankai University, told Shanghai Securities News that in bank wealth management asset allocation, the core of returns still comes from fixed income assets, with gold usually serving as an “auxiliary asset,” typically comprising 5% to 15% of the portfolio. Gold’s volatility is smoothed and diluted by the stable returns of bonds and other assets, sometimes even temporarily masked. This makes it difficult for investors to directly see how much of the returns come from gold. It also means that during sharp gold price drops, even a small allocation can cause continuous fluctuations in net value.

Huaxi Securities’ research report warns that implied volatility of gold has risen sharply, reaching historically high levels, and short-term positions should be strictly controlled. Although, from a medium- to long-term perspective, the weakening of US dollar credit and de-dollarization trends support gold, this round of price correction appears more like a deep adjustment following rapid previous gains, and subsequent recovery may take a considerable amount of time.