Hong Kong plans to sign an agreement with the Shanghai Gold Exchange this week to establish a cross-border clearing system for gold trading, Financial Secretary Paul Chan Mo-po announced Sunday.
The two exchanges will sign the agreement at the 19th Asian Financial Forum on January 26-27, positioning Hong Kong as a bridge between Western markets and China’s gold demand.
The planned central clearing system aims to reduce transaction costs, enhance trading efficiency, and increase market liquidity, Chan wrote in his weekly blog. Hong Kong targets trial operations to begin within 2026, with the Shanghai Gold Exchange participating in the system.
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The initiative comes as gold prices surged more than 60% in 2025, the sharpest annual gain since 1979, Chan said. Global demand for gold jumped 44% year-on-year to $146 billion in the third quarter of 2025.
Trading activity in Hong Kong has accelerated alongside rising prices. Average daily turnover of 99 gold, a traditional Hong Kong trading standard for gold with 99% purity, more than doubled year-on-year to HK$2.9 billion ($372 million) as of November, according to Chan.
The clearing system will provide critical infrastructure for Hong Kong’s gold market, which currently relies on direct settlement between buyers and sellers for over-the-counter spot trades. Central clearing reduces counterparty risk by positioning a clearinghouse between trading parties.
Hong Kong restructured its 114-year-old bullion exchange into the Hong Kong Gold Exchange on January 1, 2025, to support the government’s commodities strategy. The Shanghai Gold Exchange opened its first offshore vault in Hong Kong in June 2025, operated by Bank of China (Hong Kong), to facilitate yuan-denominated gold trading and storage for international clients.
The government established a Commodity Strategy Committee in December 2025 under Chan’s leadership to develop Hong Kong’s commodities ecosystem beyond traditional financial services.
Investors have increasingly shifted away from US dollar-denominated assets amid geopolitical tensions, driving demand for alternative stores of value. Hong Kong positions itself as a bridge between international gold markets and mainland China’s trading infrastructure, leveraging its regulatory framework and offshore renminbi liquidity.
The city previously secured designation as an approved warehouse location for the London Metal Exchange in January 2025.
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