Singapore is changing the rules of the game in the gold market: Asia is targeting clearing and pricing.
Singapore is launching an ambitious program to become the main hub for physical gold trading in Asia. Six of the world's largest banks have supported the initiative by joining the creation of a new clearing system for the precious metal stored on the island. Thus, the city-state is entering direct competition with Hong Kong, which has its own clearing planned for July of this year.
On Monday, June 15, Deputy Prime Minister Gan Kim Yong presented a package of initiatives from the Singapore Exchange (SGX) and the Monetary Authority of Singapore (MAS). The key goal is to take a leading position in the region, which accounts for up to 70% of global gold demand. However, the paradox is that benchmark prices are still dictated in London and New York.
Singapore Creates Infrastructure for Asian Gold
The Singapore Exchange will open an over-the-counter (OTC) clearing system for physical gold by the end of 2026. Participants include DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB. Full-fledged interbank trading will begin in 2027.
Starting in October, the Monetary Authority will offer gold storage services for foreign central banks, allowing foreign financial institutions and sovereign funds to hold reserves in Singapore. 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 the share of gold in their portfolios.
Systemic Problem of the Asian Market
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: liquidity drops during local trading hours, making large deals more difficult.
According to the Deputy Prime Minister, the authorities do not aim to completely displace existing markets. The goal is to turn Singapore into a connecting hub that matches local demand with global liquidity during daytime hours. According to the World Gold Council, over-the-counter (OTC) deals are better suited for large institutional operations than exchange-traded ones: they give participants more freedom in terms of time and trading conditions.
Hong Kong is Not Sleeping
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, attracting the attention of institutional investors and intensifying 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 the precious metal for institutional investors in Singapore.
Which hub will capture the larger clearing volume 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: The shift of gold pricing to the Asian time zone is an inevitable stage in the evolution of the market. Singapore is acting systematically: from storage and clearing to tax incentives. If the project succeeds, it will be a serious blow to the monopoly of London and New York. The tokenization of gold by DBS is an additional catalyst that could attract a new generation of investors.