Singapore challenges London: Asia demands 70% of gold, but prices are still dictated by the West
Singapore is launching a large-scale program to become the leading gold trading hub in Asia. The idea has been backed by six of the world's largest banks, which have joined the creation of a new clearing system for physical gold stored on the island. This puts Singapore in direct competition with Hong Kong, which has its own clearing system for the precious metal 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 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.
How Singapore is Emerging as a Gold Leader
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 offer gold storage services for foreign central banks, allowing foreign financial institutions and sovereign wealth 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 their gold allocation in 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 to handle such volumes. Gan Kim Yong identified as a systemic problem the fact that key price benchmarks are set in London and New York. This is particularly sensitive for Asia: liquidity drops during local trading hours, making large transactions more difficult.
According to Gan Kim Yong, Singapore does not aim to completely displace existing markets. The authorities want to turn the country into a hub for the Asian region, connecting local demand with global liquidity during daytime hours. Over-the-counter (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, attracting institutional investors and intensifying 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.
Which hub will capture a larger clearing volume, Hong Kong or Singapore, depends not only on the speed of launch. But already, six major international banks are ready to support the Singapore system, which is a serious bid for commercial success.
Expert opinion: Singapore is betting on infrastructure and regulatory incentives, which could draw a significant portion of Asian capital flows away from traditional Western centers. For crypto investors, this is a signal: tokenization of physical assets is gaining momentum, and banks like DBS are already actively participating. Keep an eye on developments—this is changing the landscape of both the precious metals and digital asset markets simultaneously.