Hong Kong is accelerating its drive to become a global gold trading hub, in a move that supports China’s broader ambition to strengthen its influence over international bullion markets amid a shifting geopolitical landscape and record-high prices.
Joseph Chan Ho-lim, Undersecretary for Financial Services and the Treasury, announced during the first gold trading session of the Year of the Horse that the government is making a full push to transform the city into a regional center for gold storage and trading. He stressed that the objective is to expand China’s market share and enhance its influence over global gold pricing.
Expanding Storage and Refining Capacity
The plan includes increasing Hong Kong’s gold storage capacity to more than 2,000 metric tons within the next three years, offering incentives for bullion dealers to establish or expand refining facilities in the city, and strengthening cross-border cooperation with mainland authorities in the bullion sector.
A key pillar of the initiative is the launch of a fully state-owned gold clearing system, scheduled to begin trial operations later this year. The platform will provide clearing and settlement services aimed at positioning Hong Kong as a credible alternative to Western gold hubs, particularly London.
Authorities are also seeking closer alignment between the Shanghai Gold Exchange and Hong Kong’s gold market, deepening financial integration between the mainland and the Special Administrative Region.
To enhance regulatory coordination and liquidity flows between Hong Kong and coastal mainland cities, the government has signed a memorandum of cooperation with Shenzhen’s Municipal Financial Regulatory Bureau to support local gold dealers.
Broader Strategy to Reshape the Gold Market
In late 2024, Hong Kong Chief Executive John Lee announced plans to develop the city into an international gold trading center, noting that Hong Kong is already among the world’s largest gold import and export markets by volume. He added that the city’s security and stability within a complex geopolitical environment make it an attractive location for gold storage, which in turn supports trading, settlement, and delivery activities.
Lee said the initiative would stimulate the broader industry chain, including investment transactions, derivatives, insurance, storage, trading, and logistics services.
Meanwhile, several Asian nations have expressed interest in storing part of their sovereign gold reserves with the Shanghai Gold Exchange as it expands its offshore vault network.
According to a report by Bloomberg, Cambodia’s central bank is expected to be among the first to store a portion of its gold reserves in SGE vaults located in Shenzhen’s bonded zone. Other unnamed central banks have also shown interest in placing their gold with China.
Cambodia holds approximately 54 tons of gold, representing around 25% of its $26 billion in foreign exchange reserves, according to data from the World Gold Council.
Analysts say Beijing is seeking to capitalize on the growing trend of deglobalization, as concerns mount over the weaponization of the U.S. dollar. In recent years, several countries have repatriated gold from traditional hubs such as London to hold reserves within their own borders.
Attracting official gold reserves is one component of China’s broader strategy to reshape the global gold market. This includes expanding the Shanghai Gold Exchange’s offshore vault network in Hong Kong and promoting yuan-denominated precious metals products beyond mainland China, reinforcing China’s long-term objective of increasing its role in global gold pricing.
Follow the latest news on Google News
