HKEX gold futures smash delivery record as US sanctions reshape trade

Hong Kong Exchanges and Clearing (HKEX) announced record-breaking physical deliveries and a trading boom in its US dollar gold futures contract, signaling Hong Kong's push to become a global gold trading hub amid increasing U.S. trade sanctions. The exchange delivered 145kg of gold on Wednesday, more than doubling the previous record of 63kg set in December 2018.

This milestone came after HKEX relaunched the contract on July 6, its fourth attempt to create a viable gold futures market since the 1980s. To increase liquidity, HKEX waived its $1-per-contract trading fee, effective until June 30, 2027. Between July 6 and August 19, average daily trading volume reached 9,974 contracts with a total trading value of $1.35 billion.

Gold prices surged after the U.S. Treasury announced plans to double the size of its liquidity-support buy-back operations for long-dated bonds, raising the metal's price to around $4,540 per ounce. This event aligns with Hong Kong's broader initiatives to bolster its bullion industry, such as launching a centralized gold clearing and settlement system on July 7 and partnering with Shanghai Gold Exchange for the Delivery Connect program, which enables market participants to deposit physical gold into a Shanghai-managed vault.

Simultaneously, the U.S. Department of Homeland Security added several Chinese gold sector companies to its trade blacklist, including Shandong Gold Mining, Shandong Gold Smelting Co, and Xinjiang Jinchuan Mining. These sanctions have been criticized by the China Gold Association, which called them factually baseless and detrimental to the global gold industry.