Hong Kong is set to launch a new gold clearing and settlement system next week, marking a significant move toward establishing the city as an international price setter for the precious metal, according to sources familiar with the development. The authorities plan to process the initial gold settlement through the system on Tuesday, with deal-making data expected to be input starting Monday.

Industry insiders noted that significant quantities of gold have been relocated from London, the United States, and Europe to Asia in anticipation of the system's launch. This shift could lead to short-term volatility in the London gold market as the global trade landscape adjusts.

Transitioning from a gold price taker to a price maker hinges on broader participation in the system by both international and local banks, one source said. Supporting this, an executive from a participating bank confirmed preparations were underway for active engagement with gold traders beginning next week.

The new platform, Hong Kong Precious Metals Central Clearing, is wholly government-owned and will collaborate with market players to establish the regulatory framework for gold clearing. The Financial Services and the Treasury Bureau described the ongoing preparations as entering the final phase, with trial operations planned later this year to ensure the system's operational stability and attractiveness to users.

In conjunction with the clearing system, the Hong Kong Exchanges and Clearing (HKEX) announced it will waive fees for its U.S. dollar gold futures contracts for one year starting Monday. This initiative renews efforts to relaunch the gold futures product following three unsuccessful attempts since the 1980s. HKEX views the fee waiver as an incentive to bolster Hong Kong’s role as a gold trading and storage hub amid rising regional demand.

A HKEX spokesman emphasized the move as part of a broader strategy to revitalize and expand gold product offerings, aligned with the Hong Kong government’s vision to position the city as a key player in global gold trading, risk management, and physical storage markets.

Despite no turnover in gold futures on HKEX for the past two years, the operator hopes that establishing initial liquidity and increasing market participation will lay the foundation for future product enhancements and overall market growth.

Eleven banks are slated to take part in the new clearing system, including the Hong Kong branches of Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank, Industrial and Commercial Bank of China, as well as global firms such as ANZ, Citi, JPMorgan, Standard Chartered, HSBC, and UBS.

Tom Chan Pak-lam, honorary president of the Institute of Securities Dealers, described the clearing system as a milestone for modernizing Hong Kong’s gold market infrastructure and diversifying its capital market. He suggested that the initiative would help attract international investors and central banks, expanding the city’s financial ecosystem beyond stocks and bonds to include gold and other commodities.

Hong Kong Gold Exchange (HGX), historically a market dominated by jewellery manufacturers and trading gold in traditional taels, will continue its traditional role while the new clearing system is expected to draw new players to the market.

Gold prices have shown notable volatility this year. After reaching a record high of US$5,608 per ounce in January, the price retreated to just below US$4,157 as of yesterday and has declined more than 6 percent this year following a sharp surge of nearly 65 percent in 2025.