China Shifts Gold Reserves from London to Hong Kong
The People's Bank of China has been buying gold for 20 consecutive months, and it's not just accumulating metal. According to Bloomberg, the PBoC is also moving its physical gold reserves away from London.
This shift affects two key aspects of the global gold market: lease rates and liquidity. By removing available metal from London's lending pool, the PBoC tightens lease rates. At the same time, it adds that same metal to Hong Kong's emerging system, deepening liquidity there.
The move is driven by infrastructure investment. Beijing is stocking the exchange it built in Hong Kong rather than relying on the one dominated by its geopolitical rivals. As a result, the gap between the London price and the Hong Kong price will become increasingly important for gold investors.