Singapore challenges London and Hong Kong: the new gold battle for Asia
Singapore is launching an ambitious program to transform itself into the main gold trading hub in the Asia-Pacific region. The idea has been supported by six of the world's largest banks, which have joined in creating a new clearing system for physical gold stored on the island. Thus, the city-state is entering direct competition with Hong Kong, where its own clearing system for the main precious metal is scheduled for July.
In my view, this is a strategic move that could radically change the global balance of power in the gold market. Asia is not just a growing region but already a dominant one in terms of consumption, and controlling the infrastructure here promises enormous benefits.
How Singapore is Taking the Lead
On Monday, June 15, Deputy Prime Minister Gan Kim Yong presented a package of initiatives from the Singapore Exchange and the Monetary Authority of Singapore. The city 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 open an over-the-counter (OTC) clearing system for physical gold by the end of 2026. Participants include DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB. Interbank trading is expected to launch from 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 will be removed. Funds and family offices will now be able to more freely increase the share of gold in their portfolios.
What the Asian Market Lacks
About 70% of annual global gold demand comes from Asian buyers, yet the continent still lacks developed infrastructure to handle such volumes. Gan Kim Yong identified as a systemic problem the fact 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 the World Gold Council, over-the-counter (OTC) transactions 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 and Currency 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 connections with central banks.
Gold has significantly appreciated this year, attracting the attention of institutional investors and intensifying 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 determined not so much by the speed of launch as by the depth of integration with central banks and institutional investors. Singapore, having attracted six global heavyweight banks, has already made a serious bid for commercial success. However, Hong Kong, with its historical ties to mainland China, also holds a strong trump card. We are watching the denouement—it will define the contours of the gold market for decades to come.