Top News

 Chennai: For decades, London and New York have dominated global gold trading and price discovery, even though Asia accounts for the largest share of global gold consumption and imports. China and Hong Kong launching ambitious initiatives to build a comprehensive bullion ecosystem, complete with gold trading, clearing, storage and price discovery, is an effort to establish Asia as a major global gold hub. Despite accounting for nearly half of global gold consumption, India and China remain primarily consumers rather than suppliers of gold. Global supply continues to be dominated by miners, refiners and bullion banks located largely in the West. As a result, Asia's influence on price discovery will remain limited until its financial markets develop deeper liquidity and stronger futures participation. According to P. R. Somasundaram, Director on the Board of the India International Bullion Exchange (IIBX), Hong Kong's latest initiative is designed to replicate London's well-established over the counter (OTC) gold market infrastructure. The new system includes central clearing, a central ledger, unallocated gold accounts, a proposed delivery link between Hong Kong and Shanghai and plans for a Hong Kong gold reference price. While these developments are significant, Somasundaram cautions against expecting an overnight shift in global gold markets. London's dominance, he says, was built over decades through the presence of miners, refiners, bullion banks, central bank vaulting, deep liquidity and, above all, market trust. He believes the new system will improve liquidity in Asia, enhance financing options and reduce premiums over time. However, the primary drivers of gold prices will continue to be US interest rates, the strength of the dollar, central bank purchases and ETF flows. Asia's growing physical demand will make markets more efficient. Somasundaram also sees opportunities for India. If Hong Kong's new infrastructure lowers transaction costs and narrows import premiums, Indian bullion importers could increasingly source gold through Hong Kong alongside existing hubs such as Dubai and Switzerland. He adds that India's own International Bullion Exchange shares similar objectives but must first establish itself as the primary gateway for India's gold imports before emerging as a global trading centre. For consumers, greater competition among bullion exchanges could bring meaningful benefits. Transparent exchanges would improve price discovery, reduce transaction costs and provide clearer benchmark prices for both buying and recycling gold. As more benchmark prices emerge across Asia, consumers would gain greater visibility into market movements and seasonal premiums, enabling them to make more informed purchasing decisions. While the transition will take time, Somasundaram believes the direction is clear: as the bullion ecosystem gradually moves eastward, Asia is set to play a much larger role in the global gold market.