Hong Kong to launch Yuan-denominated Gold futures contract

Over the past week, officials have announced several measures, including a yuan-denominated gold futures contract, with the goal of further positioning Hong Kong as an international gold hub and raising the yuan's global status.

Earlier this summer, Hong Kong launched trial operations of a gold clearing and settlement system, putting the region in a position to challenge Western dominance of the global gold market.

The government-owned clearing system reportedly “mirrors” the financial infrastructure used by the LBMA in London.

When unveiling the system, Hong Kong Precious Metals Central Clearing Company CEO John Lee Ka-chiue said the company will offer “a comprehensive suite of services ranging from gold deposits and withdrawals to transaction settlements in the over-the-counter market in Hong Kong,” adding that a new gold price ticker – HAU – would be introduced to “ensure that Hong Kong gold prices are fully accessible to global market participants.”

Now, there are more plans in the works.

On Wednesday, Sept. 24, Hong Kong Exchanges and Clearing (HKEX) announced plans to launch a yuan-denominated gold futures contract early next year.

“We have recently reactivated our gold contract in the US dollar. But in the future, perhaps sometime early next year, we will be coming up with a yuan-denominated gold futures contract,” HKEX managing director Gregory Yu said.

According to the South China Morning Post, the move aims to advance two priorities outlined in the city’s five-year plan announced last week:

1. Promoting yuan internationalization
2. Developing Hong Kong’s gold market

Last week, Hong Kong Secretary for Financial Services and the Treasury Christopher Hui Ching-yu presented the five-year plan for “Hong Kong’s financial development with a longer-term perspective and a broader vision and respond with flexibility and diversity.”

“Every measure I introduce revolves around one goal: to elevate Hong Kong from a ‘must-pass route’ for capital to a ‘must-choose destination’ for capital.”

Among the measures, Hui said the Chinese special administrative region would expand yuan settlement of payments for mainland Chinese services, such as buying water from the Dongjiang, in a bid to boost the globalization of the yuan.

This policy creates a mechanism for Hong Kong to spend renminbi receipts without converting them to Hong Kong dollars. Hui said the policy will help balance yuan received with yuan paid out and reduce exchange-rate matching problems.

More broadly, officials hope to make the yuan into a working payment currency in Hong Kong. Regular yuan payments will incentivize the region’s banks and suppliers to maintain yuan accounts, payment services, and liquidity.

Hui also announced tax reforms, saying the government will slash the profits tax rate for qualifying commodity traders from 16.5 percent to 8.25 percent by 2027.

Meanwhile, Hong Kong’s Exchange Fund, used to defend the local currency, will increase its gold portfolio.

At a press conference last week, Hui noted that total metal storage within Hong Kong’s London Metal Exchange warehouse network had crossed 30,000 tonnes, underscoring the drive to advance commodity trading.

This represents storage of industrial metals, primarily copper and zinc.

Earlier this year, Hong Kong officials said they plan to increase local gold vaulting from 200 tonnes to 2,000 tonnes over the next three years.

Gold is flowing into Hong Kong.

According to the region’s Census and Statistics Department, 107 tonnes of gold entered Hong Kong in July, up from 72.16 tonnes in February.

Looking at the bigger picture, we discover a slow but steady migration of the gold trade from the West to the East.

In 2024, World Gold Council head of Asia-Pacific and global head of central banks Shaokai Fan noted this shift, saying the gold market's “center of gravity” has shifted to the East, as gold consumption by emerging market economies is rapidly rising, with the majority concentrated in Asia.

Meanwhile, Chinese gold investment has primarily driven the recent bull market. Gold coin and bar demand hit a 12-year high of 1,374.1 tonnes in 2025, with a record-breaking value of $154 billion. More than half of that global coin and bar demand came from two countries – China and India.