China Aims to Gain Control Over Gold Price Setting

Mainland China is attempting to leverage Hong Kong to enhance its influence in the gold market. In spot trading, a clearing institution will be established under the guidance of relevant departments, aiming for trial operation as early as 2026. This aims to bridge domestic demand with overseas investors. Large mainland gold mining companies are also raising funds through the Hong Kong market, accelerating their overseas expansion. China’s proactive stance in challenging gold market dominance will support gold prices in the medium to long term.

On February 20th, following the Lunar New Year holiday in Hong Kong, the Hong Kong Gold Exchange, which trades precious metals, held its New Year opening ceremony. At the ceremony, Hong Kong’s Under Secretary for Financial Services and the Treasury, Chan Ho-lim, emphasized the commitment to expanding the country’s share and price influence in the international gold market.

By 2026, the vision of transforming Hong Kong into an international gold trading center will be significantly advanced. The Hong Kong government will establish a wholly government-funded clearing institution, the “Hong Kong Central Clearing System for Precious Metals,” with trial operation scheduled for the end of 2026. Furthermore, the capacity of gold storage facilities will be increased to over 2,000 tons within the next three years. Cooperation with the Shanghai Gold Exchange in mainland China will also be strengthened.

The world’s largest spot gold trading market is London. Settlement, delivery, and vault provision are handled by private clearing members such as JPMorgan Chase and HSBC. Transactions do not involve a central clearing house; all transactions take place between the trading parties. Data from the industry group, the London Bullion Market Association (LBMA), shows that 9,158 tons of gold are stored in London vaults. Global gold prices are typically referenced to London spot trading and New York futures prices.

China is the world’s largest producer and consumer of gold, but its gold prices are based on European and American standards, resulting in a “misalignment.” Therefore, China is promoting the linkage between the Shanghai and Hong Kong stock exchanges, establishing a central clearing house, and building vaults to attract domestic and foreign investors to the Chinese market. The aim is to increase China’s influence on gold pricing.

The government’s improvement of trading infrastructure will pave the way for mainland Chinese investors to trade or store gold in Hong Kong. Strong trading demand from mainland China is expected to attract overseas investors. If Hong Kong can function as a gold spot trading center, it will improve convenience for actual demanders in neighboring Asian countries. Compared to the current need for dedicated delivery in London, it could reduce gold transportation costs, among other things.

In response to government initiatives, mainland Chinese gold mining companies are actively acquiring mining rights overseas. Zijin Mining Group, China’s largest state-owned gold mining company, announced in late January that its overseas business arm, Zijin Gold International, had acquired Allied Gold, a major Canadian gold mining company, for approximately CAD 5.5 billion. Through this acquisition, Zijin Mining will gain access to Allied Gold’s gold mining projects in Ethiopia and Mali.

The Hong Kong stock market provides support for Zijin Mining’s overseas expansion. Its overseas business arm, Zijin Gold International, completed its IPO in September 2025, raising approximately HKD 28 billion. Chifeng Jilong Gold Mining is also listed in Hong Kong, achieving dual listing in Shanghai and Hong Kong. This company operates mining operations in Laos and Ghana, raising investment funds through its listings.

Shares of mainland Chinese gold mining companies listed in Hong Kong generally rose. Zijin Mining’s share price increased 2.5 times in 2025, and as of February 23, 2026, it was up 26% compared to the end of 2025. These gains significantly outpaced the Hang Seng Index (up 28% in 2025 and 6% as of February 23, 2026). Chifeng Jilong Gold also performed strongly, with its share price up 34% compared to the end of 2025.

The Chinese government’s vision of developing Hong Kong into an international gold trading center has benefited gold mining stocks. Rising share prices facilitate capital raising by gold mining companies through methods such as capital increases. If companies can secure sufficient development funds in the market, it will further promote overseas expansion.

The Chinese government’s efforts to strengthen cooperation with enterprises in acquiring gold rights and enhancing domestic gold trading and reserves are related to the geopolitical landscape. Koichiro Kamei, representative of the Market Strategy Institute, pointed out: “After the outbreak of the Russia-Ukraine conflict, Russian assets in Western countries were frozen, leading emerging market countries to increasingly favor storing gold domestically.”

The People’s Bank of China (PBOC) has increased its gold reserves for 15 consecutive months as of the end of January 2026. This move is widely seen as aimed at reducing the amount of US Treasury bonds in its foreign exchange reserves and lessening its dependence on the US dollar. Bank of America Securities stated, “There is still significant room for further increases.” China’s proactive stance has provided support for gold prices, which are currently at a record high of $5,000 per ounce.