The Policy Address outlined several policies conducive to the development of Hong Kong's gold business, including the full implementation of a new international gold central clearing system, the establishment of a market association to develop new international standards (including RMB pricing and settlement), the expansion and addition of commodity delivery and warehousing facilities, and the integration of various stakeholders within the gold market ecosystem.

Hong Kong Gold Exchange Chairman Haywood Cheung expressed his excitement that the Policy Address already had a framework. He added that the government's KPIs for this year were very good, and gold industry stakeholders welcomed the government's active promotion. Hong Kong's gold trading volume has long been among the top four globally, representing a significant weight. The recent government policy support is very encouraging to the industry.

Regarding the government-led establishment of an international gold settlement system, Haywood Cheung believes that the system will protect both buyers and sellers while enhancing international recognition. A significant portion of Hong Kong's gold trading volume globally is over-the-counter, lacking comprehensive safeguards, and the authorities hope to integrate these transactions into the settlement system. Haywood Cheung stated that the industry agrees that the government's clearing platform, combined with the HKME's trading and warehousing facilities, will benefit the entire gold ecosystem. Regarding the Policy Address's mention of expanding Hong Kong's gold storage capacity, with a goal of exceeding 2,000 tons within three years, Haywood Cheung believes this is based on Hong Kong's current annual physical gold deliveries of approximately 500 to 800 tons, plus the future inclusion of over-the-counter (OTC) transactions. Based on this figure, a 2,000-ton storage capacity is appropriate. Regarding the establishment of a gold industry association in Hong Kong to create a communication platform with the government and regulatory agencies, strengthen promotion and attract Belt and Road Initiative clients, and enhance talent training, Cheung Tak-hei believes the government aims to engage other industry stakeholders beyond the gold exchange, and the Hong Kong Gold Exchange will participate and fully support this initiative.

Furthermore, Cheung Tak-hei noted that the current geopolitical situation and the anticipated start of a cycle of interest rate cuts have led to international gold prices being described as "not too high yet." He personally believes this is a bull market, and believes gold could challenge $4,000 this year.

Source: AASTOCK