Singapore challenges London and Hong Kong: a new era of gold clearing in Asia
Singapore is launching an ambitious program to transform itself into the main hub for physical gold trading in Asia. Six of the world's largest banks have already supported the creation of a new clearing system for the precious metal, which will be stored on the island. This is a direct challenge not only to London and New York, but also to Hong Kong, which plans to launch its own clearing system as early as 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. This is a systemic problem that Singapore intends to solve.
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 start 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 funds to hold their reserves on the island. 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 described it as 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 the Deputy Prime Minister, 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. 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 gold 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 competition 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 already, six major international banks are ready to support the Singapore system, which is a serious bid for commercial success.
Analyst's opinion: Singapore is betting on infrastructure and regulatory flexibility, which could be a decisive factor. DBS's tokenization of gold is a step towards digital assets that could attract a new generation of investors and strengthen the city's position as a global financial center.