As international investors increasingly seek diversified allocation beyond US dollar assets, Hong Kong is accelerating efforts to establish itself as a global gold trading hub with a new central clearing system for gold transactions expected to run on a trial basis this year, Financial Secretary Paul Chan Mo-po said on Sunday.

The finance chief said Hong Kong will sign a memorandum of cooperation with the Shanghai Gold Exchange at next week’s 19th Asian Financial Forum during which the special administrative region government will announce the latest plans of its gold central clearing system.

Writing in his weekly blog, Chan noted that the local spot gold trading market has shown strong development momentum. As of November last year, the average daily turnover of 99-tael gold traded on the Hong Kong Gold Exchange had more than doubled year-on-year to HK$2.9 billion ($3.72 billion).

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However, he pointed out that current over-the-counter spot gold transactions in the SAR require bilateral settlement between buyers and sellers, creating certain inefficiencies.

“We are stepping up efforts to establish a gold central clearing system to enhance the reliability and efficiency of gold trading and physical delivery in Hong Kong, reduce transaction costs, and improve liquidity,” Chan said. The system is expected to begin trial operations this year.

“The role of gold as a central bank reserve asset, investment vehicle and risk-hedging tool has been further reinforced in recent years. There is robust global demand, particularly in Asia, for more diverse and reliable platforms for gold storage, trading, clearing, and pricing mechanisms,” Chan said.

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Gold prices rose by over 60 percent last year -- the largest annual gain since 1979. By the third quarter of 2025, the total value of global gold demand had soared 44 percent year-on-year to $146 billion, according to Chan.

Hong Kong will also strengthen its position as a world trading center. The latest roadmap for the Project CargoX, which aims to streamline trade financing processes for small and medium-sized enterprises by harnessing cargo logistics and trade data, will be unveiled this week. The initiative seeks to build a more digital, efficient, and competitive trade financing ecosystem in Hong Kong.

Chan will leave for Davos, Switzerland, on Sunday evening to attend the annual meeting of the World Economic Forum. He will deliver speeches and participate in thematic discussions to actively promote the new opportunities arising for Hong Kong under China’s 15th Five-Year Plan (2026-30).

Contact the writer at akirawang@chinadaily.com