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Gold Prices in Hong Kong Dollars
Although gold is typically denominated in U.S. Dollars, the yellow metal can be transacted in any currency. If you are in Hong Kong, for example, gold prices would likely be quoted in Hong Kong Dollars and transacted in Hong Kong Dollars. The price of gold may also be quoted in other key currencies such as U.S. Dollars or euros. Gold prices are typically quoted per ounce, gram and kilogram.
The Hong Kong Dollar is the official currency of Hong Kong and is one of the most widely traded currencies in the world. A Hong Kong Dollar is made up of 100 cents.
During the 19th century, Hong Kong made use of various currencies including Indian Rupees, Mexican Pesos and Chinese coins for transactions. Because Hong Kong was A British colony, sterling was introduced to the region but never became popular or widely used. In 1863, the Royal Mint in London began issuing special coinage for use in Hong Kong. In 1866, a local mint was established in Hong Kong for the production of Hong Kong silver dollars and half dollar coins. The coinage was not successful, however, and the local mint was closed just two years later in 1868.
The idea of a Hong Kong Dollar came into existence in 1935. During that year, Hong Kong abandoned the silver standard and introduced a crawling peg to sterling.
Hong Kong retains full autonomy with respect to issuance of its currency. Hong Kong Dollars are issued by the government and three local banks that are supervised by the Hong Kong Monetary Authority.
Hong Kong Dollars can only be issued if the issuing bank has an equivalent amount of U.S. Dollars on deposit. Hong Kong’s entire monetary base is backed up with U.S. Dollars, which are kept in the country’s exchange fund.
Gold Pricing in Hong Kong Dollars
The price of gold can fluctuate, sometimes significantly. Regardless of what currency gold may be transacted in, there are several factors that can potentially influence the price of gold. Some of the main catalysts of price changes in gold may include:
- Central bank activity
- Interest rates
- Currency markets
- Investment demand
Gold prices are determined by various price-setting mechanisms, and can trade sideways at times while also becoming quite volatile at times.
The Hong Kong gold market is one of the most active physical gold markets in the world. CME Group even introduced a 1 kilo gold futures contract which is deliverable in Hong Kong.
The Chinese Gold and Silver Exchange
The Chinese Gold and Silver Exchange Society (CGSE) was founded in 1910. This exchange is the only exchange in Hong Kong that trades physical gold and silver. The CGSE is run on a membership basis, and currently has 171 members.
The exchange trades various products, including 99 tael gold and kilobars through an open outcry system, RBM kilobar gold and HK Dollar 999.9 Tael Gold.
Asia is a major source of global gold demand. China has been boosting its gold reserves, and jewelry demand in other countries such as India tends to be strong. China has established its own gold benchmark through the Shanghai gold fix, and the region may become an even more prominent player in the global gold trade than it is today.
As Asian economies continue to grow, the importance of gold in the region may increase as well. Gold is sought after by central banks to diversify their reserves and add credibility to their currencies. Individual investors may seek out gold to diversify their own portfolios. Gold may also potentially provide a meaningful hedge for individual investors against a number of geopolitical and economic issues such as inflation, declining currency values and even deflation.
The Hong Kong gold market may increase in size and scale as economic growth and investment continues in the region. Hong Kong may also play a vital role in the pricing of physical gold all over the world. You can see the latest strikes in stock by visiting our Chinese Mint product page.