Hong Kong prepares for gold futures trading: will the fourth time be the charm?

To break a curse of repeated failures to launch gold futures trading, bourse operator Hong Kong Exchanges and Clearing (HKEX) should extend its trading hours and the government should offer tax incentives and establish clearing and storage facilities, according to industry players.

These recommendations came as HKEX aimed to relaunch gold futures in the coming months and sought market feedback to refine the plan, Acting Secretary for Financial Services and the Treasury Joseph Chan Ho-lim told lawmakers on Monday.

It will be the fourth attempt since the 1980s. The most recent launch was in 2017, when the bourse operator introduced gold futures denominated in US dollars and yuan. While both contracts remained listed, they had seen no turnover in the past two years, according to exchange data.

The exchange’s previous failures in gold futures were due to traders’ tendency to trade the products outside the bourse, and more often overseas, analysts said.

“Gold is actively traded in over-the-counter markets, with a strong network of banks and commodity traders,” said Tommy Ong, the managing director of T.O. & Associates Consultancy. “Institutional investors are used to trading with banks or brokers that offer spot gold in all currencies.”