China Central Bank Adds Gold in Hong Kong to Support Trading Hub

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Or sign-in if you have an account.(Bloomberg) — 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.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe People’s Bank of China has built up inventories in Hong Kong over the past few months, said the people, who asked not to be named discussing private matters. The latest additions are accelerating a longer-term trend whereby the PBOC has been moving some of its gold reserves back home from London, they added.That relocation of metal from London to Hong Kong is set to continue, the people said.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againPBOC and the State Administration of Foreign Exchange, which oversees China’s foreign-exchange reserves, didn’t immediately respond to faxed inquiries. A spokesperson for Hong Kong’s Financial Services and the Treasury Bureau declined to comment.Many central banks around the world choose to store a portion of their bullion reserves in London, the world’s dominant bullion market, as it allows them to actively manage their inventories by lending out the metal to commercial banks. Large volumes of gold held in reserves also provide an important source of liquidity.In recent years, however, some central banks, including India’s and Serbia’s, have repatriated some of their bullion for security or political reasons. The PBOC has also been among the world’s biggest official-sector gold buyers, with its June purchases – the most since October 2023 – marking a 20th consecutive month of additions.By diverting more gold to Hong Kong, the PBOC is signaling its support for a gold clearing system that was launched on a trial basis last month. The mechanism, which includes a new benchmark, is a key step in strengthening Hong Kong’s role in global price discovery and presents a challenge to established centers as well as regional rival Singapore, which has plans of its own to enhance gold trading.PBOC Governor Pan Gongsheng said at the official launch ceremony in July that the central bank would keep increasing the allocation of national foreign reserves to Hong Kong, reiterating a pledge he made in early 2025. The city has also invited other central banks to participate in the clearing system, focusing on nations involved in Beijing’s Belt and Road Initiative. That’s an extension of China’s ongoing efforts to become a custodian of foreign gold reserves, an offer already taken up by Cambodia. Official-sector purchases were a major driver of gold’s three-year rally to a record high near $5,600 an ounce in late January. The start of the Iran war a month later accelerated the metal’s pullback, with energy-led inflation concerns raising the likelihood of higher interest rates and creating headwinds for non-yielding bullion.In recent weeks, Chinese purchases have been instrumental in keeping gold largely above the key $4,000-an-ounce support threshold. As well as the increased volumes bought by the PBOC, institutional investors have swooped as prices dropped, with bullion-backed exchange-traded funds in China recording the longest streak of inflows since March.—With assistance from Yujing Liu, Qizi Sun and Kiuyan Wong.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.