Officials from Hong Kong and Singapore have used an annual industry gathering to pitch rival plans to create gold trading hubs in Asia, underscoring the fierce competition for new business and the race to capitalize on strong demand for the precious metal. Both financial centers aim to plug into established bullion markets by offering new contracts and services, including hosting central bank reserves, and have already secured the participation of local and international banks. Hong Kong launched trial operations of a gold clearing system in July, along with a new price benchmark.
Toward the end of the year, Hong Kong will unveil details of offshore-yuan gold futures and allow banks to settle physical trades in real time and in multiple currencies, said Christopher Hui, secretary for Financial Services and the Treasury for Hong Kong. Singapore’s ambitions are similar, with Lim Cheng Khai, executive director of the financial markets development department at the Monetary Authority of Singapore, stating efforts to connect different liquidity pools. Both cities are also courting central banks, whose reserves can provide crucial liquidity through lending to commercial financial institutions.
Singapore plans to introduce gold vaulting services for central banks, while the People’s Bank of China has built up its reserves in Hong Kong in recent months. Rising government debt levels are strengthening the case for central banks to increase their gold holdings, Joachim Nagel, president of Germany’s Bundesbank, said at the same conference. In a survey of 74 central banks published by the World Gold Council in June, 45% said they planned to buy in the coming year, the biggest-ever share since the survey began in 2018.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing