Gold prices have “explosive” upside potential, according to analysts, boding well for Hong Kong’s ambitions as a trading hub as Asian central banks continue to have a voracious appetite for stockpiling bullion.Supporting the outlook, Beijing – which has added to its gold reserve for 20 straight months – wants to better connect the Shanghai Gold Exchange to Hong Kong, and the South Korean central bank plans to buy gold for the first time in 13 years.“Gold remains in an explosive phase of the price process,” said Michael Hsueh, research analyst of Deutsche Bank. The bank expected the gold price to reach US$4,700 per ounce by the end of the year, above its forecast of US$4,600 per ounce in the fourth quarter.“Official demand for gold has now risen to a record of US$45 billion in the second quarter,” said Hsueh. “The trend of a substantial unreported component to official demand does remain in place.”Deutsche Bank is not alone in lifting its outlook. Aakash Doshi, head of gold strategy of State Street Investment Management, said gold had the potential to reach US$5,000 per ounce by the end of the year or early in 2027, underpinned by robust buying by China and continued central bank demand from emerging markets.In its midyear work conference held earlier this week, the Shanghai Gold Exchange pledged to forge cooperation between the Hong Kong and Shanghai markets.The exchange also vowed to work to expand its international board – the platform that lets offshore investors trade yuan-denominated gold and connect to cross-border settlement systems.