Hong Kong and Singapore Compete for Asian Gold Pricing Power
HK01 · 1 SOURCES1 day ago3 MIN
Summary
Global gold demand hit a record 5,002 tonnes in 2025, with gold prices surging to a historic high of $3,400 per ounce . As central banks worldwide accelerate their shift away from US dollar assets—gold now accounts for 27% of global official reserves, surpassing US Treasuries at 22%—both Hong Kong and Singapore are positioning themselves to capture Asian gold pricing power. Hong Kong has taken the lead by launching its Gold Central Clearing and Settlement System on July 7, while Singapore follows with plans for a Loco Singapore OTC clearing system by year-end .
Key Points
- Hong Kong's government-owned Hong Kong Gold Exchange Limited launched its clearing and settlement system on July 7, with Bank of China (Hong Kong) as the settlement institution and designated warehouse, and 11 Chinese and foreign banks on the board
- The Hong Kong system achieved first-phase physical connectivity with the Shanghai Gold Exchange on launch day, with HSBC and two other banks completing two-way warehouse transfers the same day
- A new HAU price code debuted on Bloomberg and London Stock Exchange Group platforms, challenging the global XAU benchmark; HKEX gold futures averaged nearly 10,000 contracts daily in July-August, totaling $1.35 billion with over 30 participants
- Hong Kong plans to expand storage capacity to over 2,000 tonnes within three years and airport vault capacity to the 1,000-tonne level, while studying tax incentives and MPF gold ETF investment liberalization
- Singapore's Deputy Prime Minister Gan Kim Yong announced the Loco Singapore OTC clearing system in mid-June, with DBS, Deutsche Bank, ICBC Standard, JPMorgan, OCBC, and UOB as founding clearing members; MAS will offer central bank vault services from October
- Singapore removed the 5% cap on qualified funds and family offices holding physical precious metals, has over 2,000 tonnes in vault capacity, and saw bar and coin demand surge 42% year-on-year to 3.5 tonnes in Q1 2025
Why It Matters
With gold replacing US Treasuries as the world's top reserve asset and nations repatriating physical holdings—France returned 129 tonnes of gold from the New York Fed after nearly a century—Hong Kong's unique advantage lies in its control of over 70% of offshore RMB payments and 1.13 trillion yuan in RMB deposits, positioning it as the only gateway linking China's physical gold market with offshore RMB liquidity . This enables Hong Kong to build a dual-currency pricing system that could challenge the dollar-denominated LBMA benchmark, potentially reshaping global gold pricing dynamics in Asia's favor.
With gold replacing US Treasuries as the world's top reserve asset and nations repatriating physical holdings—France returned 129 tonnes of gold from the New York Fed after nearly a century—Hong Kong's unique advantage lies in its control of over 70% of offshore RMB payments and 1.13 trillion yuan in RMB deposits, positioning it as the only gateway linking China's physical gold market with offshore RMB liquidity . This enables Hong Kong to build a dual-currency pricing system that could challenge the dollar-denominated LBMA benchmark, potentially reshaping global gold pricing dynamics in Asia's favor.