Hong Kong vs Singapore: the battle for Asian gold begins
Asia, which accounts for 70% of global gold demand, has long remained a consumer rather than a price setter. Key quotes are still dictated by London and New York. Now Singapore has decided to radically change this imbalance by launching a large-scale program to transform itself into the region's main gold hub.
On June 15, Deputy Prime Minister Gan Kim Yong presented a package of initiatives from the Singapore Exchange and the Monetary Authority of Singapore (MAS). The key element is the creation of an over-the-counter (OTC) clearing system for physical gold stored on the island. The launch is scheduled for the end of 2026, with interbank trading starting in 2027. Six global giants are already participating in the project: DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB. This is a serious bid, backed by support from first-tier institutions.
Infrastructure Leap
In parallel, from October, MAS will open gold storage services for foreign central banks and sovereign funds. Additionally, the 5% limit on investments in physical precious metals for funds and family offices will be lifted. This means institutions can now significantly increase their gold portfolio share without previous bureaucratic hurdles. Essentially, Singapore is creating not just a warehouse, but a full-fledged ecosystem for capital movement.
Asia's problem has always been the lack of deep liquidity during local trading hours. Large deals were difficult to execute without looking to Western markets. The new OTC system aims to solve this by bridging Asian demand with global liquidity. The over-the-counter format is ideal for large institutional operations, offering participants flexibility in timing and terms.
Race with Hong Kong
However, Singapore is not the only contender for the throne. Hong Kong plans to launch its own clearing system as early as July this year, resuming trading in metal futures. It has also secured bank support and established ties with central banks. Hong Kong is betting on speed, but Singapore counters with the scale of support and depth of reforms.
Notably, one of the participants in the Singapore system, DBS, is preparing to tokenize physical gold for retail clients, while its competitor OCBC is already actively trading and storing metal for institutions. This indicates that the battle is not only for the wholesale market but also for the retail market.
My view: The outcome of this race will be determined not by the speed of launch, but by the hub's ability to generate liquidity and trust. Support from six of the world's largest banks gives Singapore a serious advantage, but Hong Kong, with its historical ties to mainland China, remains a formidable competitor. The gold market is on the verge of a tectonic shift, and Asia is finally getting a chance to set its own rules of the game.