Hong Kong has signed a significant agreement with the Shanghai Gold Exchange to enhance gold trading and substantially expand its storage capacity for the precious metal. This move comes as gold prices have reached new heights, surpassing $5,000 an ounce, as investors seek safe-haven assets amid global uncertainty driven by US policies.
According to Hong Kong leader John Lee, the city aims to establish itself as a major international gold trading market and commodities trading ecosystem. The deal between Hong Kong and Shanghai will implement a cross-boundary trade-clearing system for gold, facilitating smoother transactions between the two cities.
Currently, Hong Kong’s main precious metals depository, located at its airport, is nearing its full capacity of 150 tonnes. To address this, authorities plan to increase the gold storage capacity to 2,000 tonnes within the next three years, solidifying Hong Kong’s position as a regional gold reserve hub.
The agreement was signed at the Asian Financial Forum in Hong Kong, with key signatories including Yu Wenjian, chairman of the Shanghai Gold Exchange, and Zou Lan, deputy governor of the People’s Bank of China. This development builds on proposals outlined in Lee’s policy speech last year, which included establishing a government-owned central clearing system for gold in Hong Kong and expanding gold storage facilities.
The central clearing system is expected to begin trial operations this year, according to Hong Kong’s Secretary for Financial Services and the Treasury, Christopher Hui. This initiative underscores Hong Kong’s commitment to strengthening its position in the global gold market, providing a secure and efficient platform for investors to trade and store gold.
As gold continues to attract investors seeking safe-haven assets, Hong Kong’s expanded storage capacity and enhanced trading infrastructure are poised to play a significant role in the global gold market. The city’s strategic location and strong financial infrastructure make it an attractive hub for gold trading, and this agreement is expected to further bolster its reputation as a key player in the industry.
