Hong Kong’s gold hub push signals China’s ambition to shape global bullion trade

Hong Kong has intensified its campaign to become an international gold trading centre, giving a push to China’s broader ambition to expand its influence over global bullion markets at a time of shifting geopolitics and record-high prices.

Speaking at the first gold trading session of the Year of the Horse, Joseph Chan Ho-lim, undersecretary for financial services and the treasury, said the government would make a “full push” to transform the city into a regional gold storage and trading hub as the local economy regains momentum.

"We will expand the country's market share and influence on prices in the international gold market,” he said.

The plan includes expanding Hong Kong’s gold storage capacity to more than 2,000 metric tonnes within three years, encouraging bullion dealers to establish or enlarge refining facilities in the city, and strengthening cross-border cooperation with mainland authorities.

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Infrastructure drive gathers pace

A centrepiece of the initiative is the launch of a fully state-owned gold clearing system, expected to begin trial operations later this year. The platform is designed to provide the clearing and settlement backbone necessary to position Hong Kong as a credible alternative bullion marketplace in Asia.

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.

In addition, the Hong Kong government has signed a memorandum of cooperation with the Shenzhen Municipal Financial Regulatory Bureau to support local gold dealers, a move aimed at enhancing regulatory coordination and liquidity flows across the Greater Bay Area.

The broader objective, Chan said, is to expand China’s market share and influence over international gold pricing — a domain historically dominated by Western financial centres.

Challenging Western benchmarks

Despite being the world’s largest gold producer and consumer, China has had limited sway over global price discovery, which is largely anchored in the London bullion market and New York futures exchanges, including those linked to the London Bullion Market Association.

By building storage, refining, trading and clearing infrastructure in Hong Kong, policymakers hope to create a more efficient regional ecosystem for mainland and international investors alike. If Hong Kong gains traction as a bullion hub, Asian participants could reduce transport and logistics costs associated with delivery in London.

Mining expansion fuels momentum

The infrastructure push comes alongside aggressive overseas expansion by Chinese gold miners, many of which are tapping Hong Kong’s equity markets to fund acquisitions.

Zijin Gold International — a unit of Zijin Mining Group — recently announced plans to acquire Canada’s Allied Gold for about 5.5 billion Canadian dollars ($4 billion), securing stakes in projects in Ethiopia and Mali.

Meanwhile, Chifeng Jilong Gold Mining has listed in Hong Kong to finance mine development in Laos and Ghana.

Gold counters have significantly outperformed the broader Hang Seng Index, buoyed by rising bullion prices and expectations that Hong Kong’s elevated status in the gold ecosystem could enhance financing channels.

Higher equity valuations allow miners to raise additional capital, creating a feedback loop that supports overseas asset accumulation while strengthening China’s footprint in global gold supply chains.

Geopolitics and reserves

The strategic thrust also reflects a changing geopolitical landscape. The freezing of Russian assets following Moscow’s invasion of Ukraine underscored the vulnerability of foreign currency reserves held abroad, prompting many emerging economies to reassess reserve composition.

The People's Bank of China has increased its gold holdings for 15 consecutive months through January while gradually trimming its exposure to US Treasurys — a move widely interpreted as an effort to reduce reliance on the dollar.

With gold prices hovering near record highs, sustained central bank buying could offer structural support to the market.