Singapore vs London and Hong Kong: The Asian Giant Reshapes the Gold Market
Singapore launches a large-scale program aimed at becoming the main gold trading hub in Asia. The idea was supported by six of the world's largest banks — they have joined the creation of a new clearing system for physical gold that will be stored on the island. Thus, Singapore enters direct competition with Hong Kong, which has its own clearing for the main precious metal scheduled for July.
How Singapore is Taking the Lead in Gold
On Monday, June 15, Deputy Prime Minister Gan Kim Yong presented a package of initiatives from the Singapore Exchange (SGX) and the Monetary Authority of Singapore (MAS). The city-state aims to take a leading position in the region: Asia accounts for 70% of global gold demand, yet key prices are still set in London and New York.
The Singapore Exchange will launch an over-the-counter (OTC) clearing system for physical gold stored in Singapore by the end of 2026. Participants include DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB. Interbank trading is expected to begin in 2027.
The Monetary Authority of Singapore will provide gold storage services for foreign central banks starting in October, allowing foreign financial institutions and sovereign funds to hold their reserves in Singapore. Additionally, as part of tax incentives, the 5% limit on investments in physical precious metals is being lifted. Funds and family offices will now be able to more freely increase their gold portfolio share.
What the Asian Gold Market Lacks
About 70% of annual global gold demand comes from Asian buyers, but the continent still lacks developed infrastructure for such volumes. Gan Kim Yong identified as a systemic problem that the main price benchmarks are set by London and New York. This is particularly sensitive for Asia: during local trading hours, liquidity drops, making large transactions more difficult.
According to Gan Kim Yong, Singapore does not seek to completely displace existing markets. The authorities want to turn the country into a connecting hub for the Asian region, matching local demand with global liquidity during daytime hours. OTC deals are better suited for large institutional operations than exchange-traded ones: they give participants more flexibility in terms of timing and trading conditions.
The Race for Leadership in the Asian Gold Hub
Singapore has an active competitor. Hong Kong plans to launch its own gold clearing system in July and resume trading in metal futures. To this end, the city has secured support from several banks and established ties with central banks.
Gold has significantly appreciated this year — this has attracted the attention of institutional investors and intensified the rivalry between the two hubs. One participant in the Singapore system, DBS, is currently preparing to issue tokenized physical gold for retail clients. Its competitor OCBC already buys, sells, and stores the precious metal for institutional investors in Singapore.
My analysis: The outcome of this race will be decided not by the speed of launch, but by the depth of integration with global banks and the ability to offer real liquidity during Asian hours. Six heavyweight banks backing Singapore is a serious bid for commercial success. If Hong Kong cannot quickly attract a similar pool of participants, Singapore could become the dominant center for OTC gold trading in the region, which in the long term could change global liquidity flows.