China Central Bank Adds Gold in Hong Kong to Support Trading Hub
China’s central bank is stockpiling more gold in Hong Kong, according to people familiar with the matter, in a move that’s likely to support the city’s push to become a major bullion-trading hub.
Analysts remain bullish on the potential for gold prices to surge, driven by China's increasing hoarding of the precious metal and Hong Kong's efforts to boost its position as a global trading hub. Beijing has been steadily adding to its gold reserves for 20 consecutive months, with a recent addition of 480,000 ounces in June alone.
This desire to better connect the Shanghai Gold Exchange to Hong Kong, along with the South Korean central bank's decision to buy gold for the first time in 13 years, has created a favorable environment for the metal.
Deutsche Bank's Michael Hsueh predicts the gold price could reach US$4,700 per ounce by the end of the year, citing official demand for gold at a record US$45 billion in the second quarter. State Street Investment Management's Aakash Doshi even forecasts the metal could soar to US$5,000 per ounce by the end of 2027, driven by robust purchases from China and continued demand from emerging markets.
The Shanghai Gold Exchange recently pledged cooperation with Hong Kong, aiming to expand its international board for offshore investors trading yuan-denominated gold. Hong Kong has also launched a gold clearing and settlement system, attracting 11 major banks, five mainland Chinese lenders, and six international institutions as participants. The city aims to increase gold vault capacity to over 2,000 tonnes within three years.
The surge in gold prices can be attributed to central bank demand, especially from China, which has been steadily increasing its gold purchases. According to Goldman Sachs, the metal's price may rebound despite temporary downside pressure from factors such as the energy market and interest rates. China's central bank has consistently bought 20 tonnes more gold each month since 2022, contributing to the price rise.
South Korea's central bank has also decided to increase its gold share in foreign exchange reserves, ending a 13-year pause in purchases, citing geopolitical risks and easing gold price pressure.
Written by urgent.news from South China Morning Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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