Singapore challenges London and New York: the Asian giant prepares a revolution in the gold market
A tectonic shift is brewing in the Asian gold market. Singapore is launching a massive program to become the region's leading hub for trading the precious metal. The idea has already been backed by six of the world's largest banks, which have joined in creating a new clearing system for physical gold stored on the island. This puts Singapore in direct competition with Hong Kong, which plans its own precious metals clearing system for July.
Singapore's Breakthrough: Next-Generation Infrastructure
Deputy Prime Minister Gan Kim Yong presented a package of initiatives from the Singapore Exchange and the Monetary Authority of Singapore. The city-state is aiming for leadership, and this is not just ambition. Asia accounts for 70% of global gold demand, yet key prices are still set in London and New York. This imbalance is a systemic issue that Singapore intends to address.
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. This means that liquidity and infrastructure previously available only to Western hubs will now emerge in the heart of Asia.
Tax Incentives and Central Bank Support
The Monetary Authority of Singapore will offer gold storage services for foreign central banks starting in October. This will allow sovereign funds and foreign financial institutions to hold their reserves on the island. As part of tax incentives, the 5% limit on investments in physical precious metals is being removed. Funds and family offices will now be able to more freely increase their gold allocation in portfolios.
Hong Kong is Not Idle: A Battle of Hubs
Singapore has an active competitor. Hong Kong plans to launch its own gold clearing system in July and resume trading in metal futures. To do this, the city has secured support from several banks and established connections with central banks.
However, Singapore has a significant advantage—the backing of six major international banks, which is a strong claim for commercial success. Additionally, DBS is preparing to issue tokenized physical gold for retail clients, while OCBC already buys, sells, and stores the precious metal for institutional investors.
My Analysis
Singapore demonstrates a strategic vision that goes beyond simply creating a trading platform. This is a comprehensive attempt to reshape the global gold market, shifting its center of gravity to Asia. The success of this project will depend on the speed of implementation and the ability to attract sufficient liquidity. However, if Singapore can become a bridge between Asian demand and global liquidity during daytime hours, London and New York will have to seriously reconsider their roles in this sector.