Singapore challenges London and Hong Kong: new gold clearing system reshapes Asia's power dynamics
Asia, which accounts for about 70% of global demand for physical gold, has long remained in the shadow of Western financial centers — London and New York, where key prices for the precious metal are set. Now Singapore is taking a decisive step to change this dynamic and become the region's main hub for gold trading.
Large-scale infrastructure initiative
On June 15, Deputy Prime Minister Gan Kim Yong presented an ambitious package of measures developed by the Singapore Exchange (SGX) and the Monetary Authority of Singapore (MAS). The key element is the launch of an over-the-counter (OTC) clearing system for physical gold stored on the island. The system will begin operations by the end of 2026, with interbank trading starting in 2027.
Importantly, the initiative has been supported by six of the world's largest banks: DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB. This is not just a declaration — it is a real commercial foundation that provides the system with liquidity and trust from the very beginning.
Tax incentives and storage for central banks
Starting in October 2025, MAS will begin offering gold storage services for foreign central banks and sovereign wealth funds. Additionally, as part of tax incentives, the 5% limit on investments in physical precious metals for funds and family offices will be lifted. They will now be able to freely increase the share of gold in their portfolios, opening access to a huge pool of institutional capital.
The problem of the Asian market: lack of infrastructure
The main systemic problem that Singapore is trying to solve is the mismatch between huge Asian demand and the lack of developed infrastructure to serve it. During local trading hours, liquidity drops, and large transactions are difficult to execute. Gan Kim Yong emphasized that the goal is not to displace London or New York, but to create a connecting hub for Asia that will provide liquidity during daytime hours for the region.
Hong Kong is not asleep: competition intensifies
Singapore has a serious competitor. Hong Kong plans to launch its own gold clearing system as early as July 2025 and resume trading in gold futures. It has already secured support from several banks and established connections with central banks. The outcome of this race will depend not only on the speed of launch but also on who can attract a larger volume of clearing.
Analyst's perspective
From my point of view, Singapore is making a much more systemic bet. The support of six global banks and integration with gold tokenization (DBS is already preparing to issue tokenized physical gold for retail clients) creates a unique hybrid of traditional and digital finance. If this ecosystem operates at full capacity, Singapore could not just catch up with but surpass Hong Kong, becoming the main gold hub not only for Asia but for the entire world.