(Yicai) March 2 -- Jewelry stores in China have increased the prices of their gold products, and Chinese lenders have tightened the risk control of their personal gold business, after a sudden escalation of the conflict in the Middle East. 

Gold jewelry prices in most Chinese stores exceeded CNY1,600 (USD233) per gram on Feb. 28, the day the United States and Israel launched airstrikes on Iran, up by more than CNY30 (USD4.40) from Feb. 27, Yicai learned from stores. Laopu Gold carried out its first gold price adjustment of the year on Feb. 28, raising prices by 20 percent to 30 percent.

The London spot gold has been on the rise. It fluctuated around USD5,180 per ounce on Feb. 27 and surged later in the day to close at USD5,278 per ounce, according to data from Wind Information. It then continued to climb, opening 2.2 percent up at USD5,393 per ounce today.

Investment gold bars are in short supply in China. In fact, the apps of major state-owned banks showed that all products under the Ruyi Gold Bar series were sold out yesterday.

In response to short-term volatility risks, some lenders have issued warnings. On Feb. 28, China Zheshang Bank said in a statement that potential gold-buying risks are relatively high because prices of the precious metal have greatly fluctuated recently due to the influence of the international geopolitical situation and macroeconomic policy factors.

If the gold market continues having abnormal price fluctuations, dried-up liquidity, and a significant decline in trading acceptance capacity, CZ Bank may temporarily suspend the trading of its Wealth Gold Accumulation business, the lender noted.

Meanwhile, other banks have explicitly classified gold accumulation as a medium-risk product. For example, the product risk rating of the personal gold account business of China Merchants Bank is now R3, which is medium risk. Individual customers will receive an assessment of their personal risk tolerance when applying for this business.

In the short term, the gold market will highly depend on the direction, scope, and intensity of the conflict, industry insiders believe. In the long run, the driving effect of geopolitical events on gold prices is likely to gradually weaken, and the market is expected to return to rationality.

Gold prices will highly depend on the intensity of Iran’s counterattack and how much the conflict spreads, said Wang Weimang, investment manager at the asset management department of Zhonghui Futures. If the conflict spreads to Lebanon and the Red Sea, blocking shipping and contracting energy supply, gold will start soaring, driven by both safe-haven and inflationary factors, Wang added.

Editor: Futura Costaglione