Hong Kong Plans Shanghai Gold Alliance as Clearing Trial Targets 2026

A Gold Trading Deal Set for January 26-27

Hong Kong plans to sign a memorandum of understanding with the Shanghai Gold Exchange at the Asian Financial Forum on January 26-27, 2026, as it works toward a central clearing system for gold trading. Financial Secretary Paul Chan Mo-po announced the planned agreement on Sunday, with trial operations of the system targeted to begin during 2026.

The initiative brings together two parts of Hong Kong's ambition: making gold transactions more reliable and connecting its international financial market more closely with Mainland China. The Shanghai Gold Exchange will be invited to participate in the clearing system, while the agreement is intended to set a framework for greater market access between the two cities.

Hong Kong is pursuing the project after an exceptional year for gold. Prices rose more than 60% in 2025, their sharpest annual increase since 1979. According to Chan, the value of global gold demand reached US$146 billion in the third quarter of 2025, up 44% from a year earlier.

Local trading has also grown. Average daily turnover in Hong Kong's traditional 99 gold market more than doubled from a year earlier to HK$2.9 billion, approximately US$372 million, as of November 2025. The name refers to gold with 99% purity.

Chan described the clearing system as essential infrastructure for the market, explaining that the government wants to improve trading and delivery while making transactions cheaper and easier to complete.

We are accelerating the push to establish a central clearing system as a vital piece of financial infrastructure, to enhance the reliability and efficiency of gold trading and delivery in Hong Kong, lower transaction costs and increase liquidity.

What Central Clearing Would Change

Hong Kong's market currently relies on buyers and sellers settling their over-the-counter spot gold trades directly with each other. These are transactions agreed between parties rather than completed through a central exchange process, involving gold for immediate trading and settlement.

A central clearing system would place a clearinghouse between those parties. The clearinghouse becomes the buyer to every seller and the seller to every buyer. Each participant therefore deals with the clearinghouse instead of relying entirely on the other trader to meet the agreement.

The arrangement reduces counterparty risk, which means the danger that a buyer or seller fails to pay, deliver gold or otherwise honour a transaction. For institutions managing large investments, dependable settlement and strong controls over that risk can be important reasons to participate in a market.

Hong Kong also wants clearing to lower transaction costs and increase liquidity. Liquidity describes how easily an investor can buy or sell without causing a large movement in the price. A market with more participants and smoother settlement can make transactions easier to complete.

The planned system would modernise the city's existing trading arrangements and could help attract more institutional investors. It is also part of Hong Kong's effort to compete with established gold trading centres such as London and New York. As of January 22, the agreement remained scheduled for the following week, and no exact date had been given for the start of the 2026 trial.

Shanghai Brings an Existing Physical Connection

The Shanghai partnership builds on infrastructure already operating in Hong Kong. In June 2025, the Shanghai Gold Exchange opened its first offshore delivery vault in the city, operated by Bank of China (Hong Kong). The facility supports gold trading and storage in yuan for international clients.

The exchange's International Board also launched contracts allowing delivery in Hong Kong. Those contracts and the vault provide a physical foundation for closer cooperation: traders need arrangements for storing and delivering actual gold alongside the financial systems used to buy and sell it.

Christopher Hui, Hong Kong's Secretary for Financial Services and the Treasury, said the city would use its international reach to complement Shanghai's market and strengthen gold price discovery at the national level. Price discovery is the process through which buying and selling establish the price of an asset.

Shanghai offers access to Mainland China's large market, while Hong Kong offers connections with international investors and financial institutions. China is the world's largest consumer of gold, giving the proposed partnership a substantial market on which to build.

The memorandum is intended to formalise a framework for mutual market access. Deeper integration could eventually allow smoother trading across the border and give international investors more direct access to China's gold market. The planned agreement is a step toward that arrangement, with the clearing trial forming another part of its development.

Airport Storage and a Target Above 2,000 Tonnes

Hong Kong's ambitions require more than trading technology. A vault within the city's airport currently holds almost 150 tonnes of gold, valued at more than US$20 billion at current prices. Plans call for its capacity to expand over the next three years to hold almost seven times that amount.

The planned airport capacity would be twice the amount held in a reserve near Singapore's Changi airport. That comparison concerns the airport facilities, while Hong Kong's broader government target is to develop total gold storage capacity of more than 2,000 tonnes within three years.

The airport expansion and the territory's wider storage target therefore cover different parts of the project. The almost 150 tonnes describes gold currently held in the airport vault; the target above 2,000 tonnes describes the capacity Hong Kong wants to make available across its developing storage network.

The government is supporting the Airport Authority Hong Kong and financial institutions in establishing gold storage facilities. More space would provide the physical backing for a larger trading market and support Hong Kong's ambition to become a regional gold reserve hub.

Storage, delivery and clearing work together. A buyer needs confidence that a transaction will be completed, but also needs suitable arrangements for holding or receiving the metal. Hong Kong's strategy addresses those requirements alongside its efforts to attract trading activity.

A Local Market Undergoing Change

Hong Kong has a long history as a precious metals trading centre and a gateway for gold flowing into China. On January 1, 2025, its bullion exchange, with 114 years of history, was restructured into the Hong Kong Gold Exchange as part of the city's efforts to modernise its commodities market.

The rise in average daily 99 gold turnover to HK$2.9 billion by November 2025 shows how activity accelerated alongside rising prices. Gold has attracted investors seeking a safe haven during uncertainty and a hedge against inflation, meaning an asset they hope will help preserve purchasing power as prices rise.

Hong Kong's traditional market also uses the 99 tael standard. International investors will need to understand the features of that trading convention as the city seeks a larger global audience. Moving toward more international standards may help attract participants while retaining the characteristics of the local market.

The exchange restructuring, increased trading and planned clearing system are connected parts of that transition. Hong Kong is seeking to retain its established role in physical gold while developing the infrastructure that larger international institutions expect.

Why Investors and Regional Rivals Matter

Investors have increasingly moved away from assets priced in US dollars amid intensifying geopolitical tensions. Demand for alternative stores of value has helped gold, which investors traditionally turn to during periods of uncertainty.

Hong Kong is positioning itself between international gold markets and Mainland China's trading infrastructure. Its regulatory framework and offshore renminbi liquidity, the availability of China's currency outside the Mainland, support that role. International investors seeking Asian gold exposure can use Hong Kong rather than enter Mainland markets directly, where different currency and regulatory requirements apply.

Hong Kong is the world's largest offshore renminbi business hub. That position gives it a basis for developing gold products and services priced in renminbi, also known as yuan, while maintaining access for international participants.

Singapore is an established regional competitor in precious metals storage and trading, particularly for wealth management clients. Hong Kong's planned airport storage expansion shows the scale of its effort to compete for that business.

Hong Kong also draws advantages from its proximity to China's gold demand and its existing integration with Mainland markets through various Connect programmes. Those programmes offer forms of investor access that Singapore cannot match. The city's time zone overlaps with both Asian and European markets, supporting extended trading hours for global participants.

In January 2025, Hong Kong became an approved warehouse location for the London Metal Exchange. That designation added to its credentials as a commodities centre and recognised its infrastructure and regulatory standards as it sought to expand beyond its traditional financial activities.

Government Policy Extends Beyond Gold Trading

Chief Executive John Lee identified gold trading as a growth area in his 2025 Policy Address, within a wider strategy to consolidate and expand Hong Kong's position as an international financial centre. The government has accepted recommendations from the Working Group on Promoting Gold Market Development and is implementing measures across storage, trading and investment.

In December 2025, the government established the Commodity Strategy Committee, led by Chan. The committee is intended to coordinate the development of Hong Kong's commodities ecosystem beyond traditional financial services and provide support and regulatory attention for initiatives including gold.

Hong Kong's wider financial market provides a foundation for that effort. In the 2025 period described alongside the policy programme, the Hang Seng Index had risen more than 20% since the start of the year, and average daily market turnover reached HK$250 billion, nearly twice the previous year's level.

By the end of August 2025, funds raised through initial public offerings exceeded HK$130 billion. That was nearly six times the amount raised in the same period a year earlier and put Hong Kong first globally for IPO fundraising. An IPO is the process through which a company first sells its shares to public investors.

Those financial services activities give Hong Kong an established base of investors, institutions, legal arrangements and market infrastructure. The government wants to use that base to develop commodities trading and capture a larger share of global gold transactions.

Gold Funds, Tokens and Project Ensemble

The government's plans include a wider choice of gold investment vehicles, with assistance for issuers seeking to launch gold funds. Such products would sit alongside physical bullion trading and storage, giving investors additional ways to obtain exposure to the metal.

Hong Kong also supports the development of tokenized gold. Tokenization represents physical gold through a digital token recorded on a blockchain, a shared digital record of transactions. The aim is to make ownership easier to divide into smaller amounts and to trade.

For retail investors unable to afford a larger purchase of physical bullion, fractional ownership could reduce the amount needed to enter the market. Tokenization could also allow faster settlement and reduce costs associated with storing and insuring physical gold.

The Hong Kong Monetary Authority (HKMA) has been promoting Project Ensemble to support the development of the tokenization market. Its sandbox experiments allow industry participants to explore financial infrastructure using blockchain technology in actual business scenarios. A sandbox provides an environment for testing those arrangements.

Gold could serve as a test case for this work, linking a traditional physical commodity with newer financial technology. The government is exploring these products as part of the same market development effort that includes clearing, vaults and closer cooperation with Shanghai.

Refining, Logistics and Industry Coordination

Hong Kong's gold strategy extends across the activities needed to bring metal to market. The government is encouraging gold traders to establish or expand refineries in the city, where gold can be processed into refined material suitable for trading.

Officials are also exploring whether supplied materials could be processed in the Mainland to produce refined gold for export to Hong Kong. That would connect Mainland processing capacity with Hong Kong's trading market, alongside the proposed links in storage and clearing.

Logistics infrastructure forms another part of the plan. Gold must move between refineries, storage facilities and buyers, so the wider ambition includes the arrangements needed to transport and deliver it as well as the systems used to trade it.

The government also supports establishing a trade association for the gold industry. Such an organisation could coordinate businesses, promote best practices and represent the sector's interests to regulators. Trade associations have played similar roles in other financial markets.

These measures are intended to build a gold market that can sustain activity across processing, storage, investment and delivery. Renminbi products would add another connection to China's financial system while Hong Kong retains its international accessibility.

The Schedule and the Work Still Required

Hong Kong's programme has developed through several steps, with the planned Shanghai agreement following the exchange restructuring, new delivery infrastructure and government policy decisions of 2025.

• January 1, 2025: Hong Kong's historic bullion exchange was restructured into the Hong Kong Gold Exchange.
• January 2025: Hong Kong became an approved warehouse location for the London Metal Exchange.
• June 2025: The Shanghai Gold Exchange opened its first offshore vault in Hong Kong, operated by Bank of China (Hong Kong).
• December 2025: The government established the Commodity Strategy Committee under Paul Chan.
• January 26-27, 2026: The memorandum with the Shanghai Gold Exchange is scheduled to be signed during the Asian Financial Forum.
• During 2026: Hong Kong aims to begin trial operations of the central gold clearing system.
• Within three years: The government aims for total gold storage capacity above 2,000 tonnes, alongside the planned airport vault expansion.

The clearing trial will require coordination over technology, regulatory arrangements and participation by market institutions. Building a system is one task; attracting traders and institutions to use it is another part of making the market function.

Hong Kong and Mainland China operate under different legal systems, making regulatory alignment necessary for smooth transactions across the border. The one country, two systems framework has already supported financial cooperation through programmes such as Stock Connect. A similar approach could provide a model for gold trading.

Market education will also matter as international participants assess Hong Kong's trading standards and arrangements. The government's objectives bring together several projects, each intended to support a market that is easier to access, more reliable to settle and better equipped to handle physical gold.

The Bottom Line

• Hong Kong plans to sign a memorandum with the Shanghai Gold Exchange at the Asian Financial Forum on January 26-27, 2026.
• A central clearing system is intended to reduce counterparty risk, lower costs and improve liquidity, with trial operations targeted for 2026.
• Gold prices rose more than 60% in 2025; Chan put global demand value at US$146 billion in the third quarter, up 44% from a year earlier.
• Average daily turnover in Hong Kong's 99 gold market more than doubled to HK$2.9 billion as of November 2025.
• The airport vault holds almost 150 tonnes of gold; Hong Kong's wider target is storage capacity above 2,000 tonnes within three years.
• Shanghai's first offshore vault opened in Hong Kong in June 2025, supporting yuan gold trading and storage for international clients.
• The wider strategy includes refineries, logistics, gold funds, tokenized gold, renminbi products and a gold industry trade association.