A major gold trading platform in Shenzhen, China, has collapsed into a liquidity crisis as surging gold prices prompted investors to cash out, leaving tens of thousands of retail investors with losses exceeding 10 billion yuan (US$1.4 billion). Hundreds gathered outside the company's offices over the weekend demanding refunds, with police intervening to maintain order. Authorities in Shenzhen's Luohu district announced a task force on Wednesday to probe the platform's irregular operations.
The surge in gold prices has ignited a 'gold fever' among Chinese retail investors, but it has also revealed market vulnerabilities. Global spot gold broke past $5,280 per ounce on Wednesday, with year-to-date gains exceeding 20 percent. In China, major jewelry brands including Chow Tai Fook, Lao Feng Xiang, Chow Sang Sang, and Laomiao Gold raised pure gold jewelry prices to between 1,612 and 1,620 yuan ($232.03) per gram.
Shenzhen-based online metals trading platform JWR buckled under redemption pressures. According to investors and domestic media reports, the platform has left tens of thousands of retail investors with combined losses totaling more than 10 billion yuan (US$1.4 billion) in unpaid funds. As gold spot prices surged again in recent weeks, a wave of customers sought to cash out earnings, plunging the company into a liquidity crunch and rendering it unable to fulfill surging withdrawal requests.
Over the weekend, hundreds of investors rallied outside JWR's offices in Shenzhen demanding their money back, with videos posted on social media showing police intervention to keep order. Financial news outlet Yicai, citing investor estimates, reported that unpaid funds could exceed 10 billion yuan. Authorities in Shenzhen's Luohu district announced on Wednesday that a task force has been established to investigate the platform's abnormal business operations.
The incident underscores the opportunities and risks of the gold price rally. Li Yuefeng, a researcher at the Beijing Gold Economy Development Research Center, noted that fears of trade wars and a potential US dollar decline have fueled the surge. He predicts gold prices could test the 5,300-5,700 yuan per gram range in the short term, peaking around 5,500 yuan, followed by a likely corrective phase.
Beijing resident Wang Lin recounted buying 80 grams of gold at a Postal Savings Bank in April 2025, earning about 23,000 yuan in returns. 'Buying gold is like saving. Even if I bought at a high price, it still feels safer than investing in stocks,' she said. Salesperson Wang Xiaoli at a Lukfook Jewellery store in Beijing said gold prices rose nearly 200 yuan per gram in a week, with many customers purchasing jewelry and bullion bars as investments.