Policy Address 2026 | HKMA explores increasing the Exchange Fund's gold holdings

Hong Kong Monetary Authority is exploring the possibility of increasing the Exchange Fund's gold holdings and participating in Hong Kong's spot and futures markets, Chief Executive John Lee Ka-chiu announced in the Policy Address 2026, in a bid to develop the city as an international gold trading center.

The regulator is also considering gradually transferring its physical gold holdings to designated vaults appointed by the Hong Kong Precious Metals Central Clearing Company, Lee said.

This came as Hong Kong's storage area has exceeded 60 000 square metres, with an inventory of more than 20 000 tonnes of metal to date.

To promote clustering of physical delivery, financing and risk management services, SAR will facilitate more London Metal Exchange-approved warehouses to be established in the Northern Metropolis.

The city is expected to implement a half-rate tax concession for physical commodity trading while exploring a proposal to provide tax concessions for qualifying activities within the gold and commodity trading ecosystem.

Hong Kong's central clearing and settlement system for gold will be officially launched in the first quarter of 2027, Lee noted.

Besides, Hong Kong Exchanges and Clearing (0388) will announce details of the new yuan-denominated and physically settled gold futures contracts this year to boost the global influence of the yuan in the pricing of precious metals.

The HKEX is striving to launch a pilot project for tokenised warehouse-receipt financing in collaboration with designated banks in 2027, using physical tracking technologies to promote the use of commodity inventories as collateral by enterprises in securing liquidity.

The government will set up a dedicated Gold Hotline to provide one-stop support for mainland and overseas gold traders to take part in Hong Kong's gold trading ecosystem, while encouraging the sector to establish an industry association for gold and host a flagship event in 2027.

SAR will establish a Joint Working Group on Commodity Trading to be led by the Secretary for Financial Services and the Treasury, which will holistically identify market opportunities and prospects for cross-exchange collaboration.

In terms of regulation, the Securities and Futures Commission will enhance the regulatory regime for over-the-counter derivatives to facilitate risk and capital management in gold and commodity trading, while the Insurance Authority will strengthen co-ordination with the industry in arranging insurance for precious metals.

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