Singapore challenges London: 70% of global gold demand is now dictated by Asia
Singapore is launching an ambitious program aimed at becoming the main gold trading hub in Asia. The idea has already been 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 is entering into direct competition not only with London and New York, but also with Hong Kong, which has its own precious metal clearing planned for July.
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-state expects 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. This is a systemic problem that Singapore intends to fix.
How Singapore is becoming a leader in gold
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.
Starting in October, the Monetary Authority of Singapore will provide gold storage services for foreign central banks, 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 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 called it 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 freedom 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 as early as July and resume trading in gold futures. To this end, the city has secured support from several banks and established connections with central banks.
Gold has risen significantly in price 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 precious metals for institutional investors in Singapore.
Which hub will capture a larger clearing volume, Hong Kong or Singapore, depends not only on the speed of launch. But even now, six major international banks are ready to support the Singapore system, which is a serious bid for commercial success.
Expert opinion: The shift of gold pricing from London to Asia is not just a change of location, but a fundamental shift in the structure of the global market. Singapore, with its tax incentives and support from the largest banks, has every chance to become a new global liquidity center, especially against the backdrop of growing demand from central banks and institutional investors. Hong Kong will have to try very hard not to lose the initiative.