Editorial | No better time for Hong Kong to strike its golden deal with Shanghai

Gold prices have breached the US$5,500 mark, thanks in no small part to the erratic comments and policies of Donald Trump. The US president’s return to the White House saw the price of the precious metal almost double in a little over a year. When Trump said a weaker dollar was “great”, gold rallied some more. Everything he touches and talks about seems to lead to higher prices for gold. That is, one has to admit, a kind of Midas touch.

From geopolitical tensions and a weaker dollar to concerns about the independence of the US Federal Reserve and the safety of American assets, especially US Treasuries, investors and central banks around the world are piling on gold as a safe haven, or at least a hedge. All these factors, one way or another, have something to do with Trump. And let’s not forget silver and platinum, which have been on a tear even greater than gold’s.

Hong Kong and Shanghai have just signed a deal to enable both markets to work closer together in bullion trading. A wholly owned entity, the Hong Kong Precious Metals Central Clearing Company, will tie up with the Shanghai Gold Exchange (SGE) to enhance trade clearing, risk management and networking.

Like other central banks, the People’s Bank of China has been buying gold and offloading US Treasuries. In June, a three-year plan was unveiled to increase gold reserves by up to 10 per cent, while raising domestic production by more than 5 per cent.