Hong Kong Gold Clearing System to Launch in July, At Least Four Banks Stock Up on Large Gold Bars

The brand-new central gold clearing system in Hong Kong is scheduled to go live in July. Among the 11 participating banks, at least four are importing standard large gold bars in bulk to establish inventories in advance.

According to Bloomberg, citing several market traders who wish to remain anonymous, clearing banks have already placed orders with traders, bringing in large quantities of 400-ounce gold bars that meet London Good Delivery standards.

The 400-ounce standard large gold bar is the mainstream trade unit in the global core gold trading markets in London, mainly used for large wholesale transactions between banks and sovereign institutions. In contrast, the Asian market has long favored 1-kilogram small gold bars, with relatively low circulation of such large delivery bars.

Industry insiders explained that clearing banks are stockpiling gold in advance to meet physical delivery needs after the system goes live and to ensure the smooth operation of clearing processes.

The operator of this clearing system is the HongKong Precious Metals Central Clearing Co., whose board consists of 11 Chinese and foreign banks.

Market sources indicate that some banks will be qualified as clearing banks from the very first day of the system's operation, while others, due to insufficient gold storage and delivery capabilities, will need to meet standards at a later stage. In the initial phase, the system will uniformly adopt the London Good Delivery standard, while detailed rules for future deliveries are yet to be decided by officials.

In response to media inquiries, the Financial Services and Treasury Bureau (FSTB) of the Hong Kong SAR government stated via email that the clearing operator is continuously working with market participants to build institutional frameworks and improve business rules, and the entire preparation process has entered its final stage.

Hong Kong's launch of its own gold clearing system aims to seize a first-mover advantage and strive to become Asia’s leading gold trading center. Last week, Singapore announced plans to introduce its own gold clearing mechanism by the end of this year.

Both major Asian financial centers are targeting the region’s robust demand for gold allocation: Asian investors are optimistic about gold's long-term value retention, using it as a tool to hedge assets.

In the first half of this year, gold prices surged to a new historical high. Subsequently, prices experienced a correction due to rising inflation from Middle East geopolitical tensions and expectations of U.S. Federal Reserve rate hikes, yet regional physical and investment demand for gold remains strong.

The two clearing systems have different standard designs: Hong Kong’s initial phase will only implement the London 400-ounce large gold bar delivery standard. The Singapore system, meanwhile, accommodates both mainstream specifications—matching London’s large bar good delivery framework, while also connecting with the 1-kilogram bar delivery and settlement standards commonly used by major exchanges in Chicago and Shanghai—thus covering both Eastern and Western trading categories.