Hong Kong has started the trial operation of its new gold central clearing system, backed by several major banks, in a key move that could strengthen the city's push to become a major bullion-trading hub with greater price-setting influence. The system introduces HAU, a new gold price benchmark that is now live on Bloomberg, and Hong Kong Chief Executive John Lee said the goal is to build a more sophisticated institutional gold-trading market while expanding the city's gold storage and refining capacity in the coming years.
Hong Kong Precious Metals Central Clearing Ltd., a government-owned clearing company focused on gold deposits, withdrawals and over-the-counter transaction settlements, has already completed its first gold deposits and transaction settlements with multiple banks and clients, including mining companies, refiners, jewelers and investors. JPMorgan Chase & Co., HSBC Holdings Plc NYSE:HSBC, UBS Group AG NYSE:UBS and five Chinese banks are among the financial institutions represented on the clearing company's board, while HSBC said it would expand its gold storage capacity in Hong Kong to 200 tons.
The launch may matter for investors because Hong Kong appears to be moving quickly to capture stronger Asian demand for gold, even after bullion's multi-year rally paused earlier this year amid higher energy prices, inflation concerns, possible central bank rate increases and a stronger dollar. Spot gold traded near $4,130 an ounce at 4:45 p.m. Hong Kong time on Tuesday, while Hong Kong is also working with the Shanghai Gold Exchange and Hong Kong Exchanges and Clearing Ltd. on broader gold-market infrastructure, including a possible yuan-denominated futures contract.