'The Chinese Gold & Silver Exchange Society has 100 years' experience in gold trading while the Airport Authority has sufficient security to handle storage and transitions. This will be a prefect combination,' Mr Fung said in an interview.

He said the two sides would discuss the details of such plans in the following three months and he hopes the gold depository could be launched within a year.

The idea is for traders, banks and jewellery makers to be able to store gold stocks at the airport, making the export process simpler, Mr Fung said.

Up for discussion is whether the two bodies form a joint venture or whether the authority sub-contracts the operation to the exchange by renting it space at the airport. Banks and gold traders might be invited to join the project.

'The proposed move would be able to help Hong Kong to become a regional hub for China's gold trading with other countries, and would strengthen Hong Kong's role as a major financial centre,' Mr Fung said.

Last year, Beijing relaxed gold trading but international transactions remain the purview of the People's Bank of China. Rising income levels have increased demand for gold products while the central government has invested a substantial part of its reserves in gold, increasing import demand.

'These situations have led many gold traders to eye the mainland market and we can expect more imports [to China],' Mr Fung said.

'If we [Hong Kong] do not have enough facilities and services, gold trading will shift to other markets.' Gold prices recently hit a seven-year high of US$413 per ounce compared with a low of US$318 earlier this year.

Mr Fung said the exchange was also working on a plan to replace open outcry trading with electronic trading; possibly allowing it to become a 24-hour operation.

'More products will also be launched as we believe the market is interested in trading gold and other commodities again,'' he said.