Hong Kong's gold ambitions: what the new central clearing system means for investors

Context

Hong Kong has traded gold for more than a century. The Chinese Gold and Silver Exchange Society, founded in 1910, still operates, and Hong Kong is a major channel for physical gold flowing into mainland China. What it has lacked, compared with London, is a modern central infrastructure for clearing and settling over-the-counter trades in large bars.

Gold's sharp rise in recent years, driven partly by central bank buying and geopolitical risk, has given that gap new urgency. The government's 2025 Policy Address set out a plan to develop Hong Kong into an international gold trading hub, with clearing, storage and connectivity to the mainland market at its core.

What changed

On 7 July 2026, the Financial Services and the Treasury Bureau announced the trial operation of the new clearing and settlement system, together with a package of supporting measures. The main elements are as follows.

The clearing system. The system is governed by the Hong Kong Precious Metals Central Clearing Company (HKPMCC), which is wholly owned by the government. Its board includes the government, the Shanghai Gold Exchange, regulators and 11 banks. Bank of China (Hong Kong) acts as settlement institution and designated vault. Gold is held and settled on an unallocated basis in bars of about 400 fine troy ounces meeting international standards, and the system will connect with Hong Kong's real-time gross settlement system so that gold and cash can settle simultaneously (delivery versus payment).

Delivery Connect. Building on a cooperation agreement signed in January, the HKPMCC has applied to become an international member of the Shanghai Gold Exchange and opened a physical gold account. Participants can move gold between the HKPMCC system and the Shanghai exchange's international board vault in Hong Kong. ICBC (Asia), HSBC and Bank of China (Hong Kong) completed the first two-way transfers on launch day.

Price discovery. A new HAU ticker, developed with Bloomberg, provides a Hong Kong reference rate based on indicative bid and offer prices from market participants, particularly useful during Asian trading hours.

Storage. The government aims to expand total storage capacity to more than 2,000 tonnes within three years. The Airport Authority Hong Kong has launched a project to develop vaulting facilities on a thousand-tonne scale, and discussions are under way on expanding refining capacity.

Products and supporting measures. The number of gold ETFs listed in Hong Kong has reached six. HKEX has revitalised its US dollar gold futures contract and is exploring a renminbi gold futures contract with delivery support from the Shanghai Gold Exchange. The Insurance Authority is coordinating specie insurance and will launch a dedicated hotline in July. The Mandatory Provident Fund Schemes Authority will streamline its approval mechanism for gold ETFs.

Tax. The pending fund and family office bill would add precious metals to the list of qualifying investments. Separately, the government is exploring tax incentives for institutions conducting gold trading and settlement. The 2025-26 Budget had already proposed a half-rate profits tax concession for physical commodity trading.

Implications for investors, families and businesses

For individual investors, the most immediate changes are more listed gold products and, over time, deeper local liquidity. Investors should still compare fees, tracking methods and whether a product holds physical gold or derivatives.

For families holding physical gold, more vault capacity and better insurance coordination may make Hong Kong a more practical place to store bullion. The difference between allocated and unallocated holdings is important: unallocated gold is efficient for trading but represents a claim on a pool rather than specific bars.

For family offices, the fund and family office bill, if passed, would allow gains on precious metals to fall within the exemption, subject to limits. That could simplify portfolios that currently hold gold outside the main vehicle.

For businesses in jewellery, refining and trading, the clearing system and Delivery Connect offer a more efficient route to the mainland market, and possible future tax concessions could lower costs.

Questions to consider

• Do we hold gold for investment, hedging or wealth preservation, and does our holding method match that purpose?
• Is our gold allocated or unallocated, and do we understand the counterparty risk in each case?
• Where is our gold stored and insured, and would Hong Kong storage be more convenient?
• If we use a family investment vehicle, how would the proposed tax changes affect gold holdings?
• Which listed products best match our needs on cost, structure and liquidity?

Closing

Hong Kong is not trying to replace London. It is trying to become the natural hub for gold flowing between Asia, the mainland and the rest of the world. The pieces launched on 7 July are infrastructure, which tends to matter more over years than weeks. For investors and families, the result should be more choice and more confidence in holding gold through Hong Kong.