Global gold market liquidity is deep enough to support the growth of emerging Asian hubs alongside established Western trading centres, representatives from Hong Kong and Singapore told a precious metals conference on Tuesday.
The two Asian financial centres are expanding their gold trading ecosystems, prompting worries in the West that this would mean direct competition for liquidity with the London bullion market, the world’s largest for over-the-counter trade, overseen by the London Bullion Market Association.
This is especially focused on Hong Kong with its connection to mainland China, the world’s top metals consumer. The territory plans to launch the first central clearing and settlement system for gold in early 2027 and aims to have more than 2,000 metric tons of gold storage capacity within two years.
“We are positioning ourselves as a super connector and also a super value adder,” Christopher Hui, secretary for financial services and the treasury in the Hong Kong government, told the LBMA’s annual conference in Sorrento, Italy.
“We are connecting the LBMA standards and also its internationalism with the Asian liquidity.”
To complement, not displace
Hong Kong in July launched a “Delivery Connect” programme with the Shanghai Gold Exchange to facilitate cross-border gold settlements.
“Towards the end of this year, you will see a number of things happening: we will announce details of a renminbi physically delivered gold futures to be launched on our stock exchange,” Hui said.
Singapore, meanwhile, is starting up central bank gold-vaulting services this month and establishing an OTC gold clearing system. The Southeast Asian city-state already has commercial vaulting capacity of more than 2,000 metric tons.
Singapore sees strong growth in Asian gold demand as the main driver for this expansion, Lim Cheng Khai, head of the financial markets development department at the Monetary Authority of Singapore, told the conference.
“I think both Hong Kong and Singapore, we are under no illusion that we are trying to displace, but we are trying to complement price discovery in the Asian time zone,” he said.
“People are looking to diversify gold holding storage”, he added. “The demand coming from both sovereigns, institutional investors, as well as high net worth individuals puts us in a good place to provide and build up that entire ecosystem.”
(Reporting by Polina Devitt;Editing by Alison Williams)
