Singapore challenges London and Hong Kong: new gold clearing system changes the game in Asia
Asia, which accounts for about 70% of global gold demand, has long played a secondary role in this market. Key prices are still dictated by London and New York, while the infrastructure for large transactions during Asian hours leaves much to be desired. Singapore has decided to break this vicious cycle and is launching a large-scale program to transform itself into the region's main hub for physical gold trading.
On June 15, Deputy Prime Minister Gan Kim Yong presented an ambitious package of initiatives from the Singapore Exchange (SGX) 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 system is scheduled to launch at the end of 2026, with interbank trading starting in 2027. The project has already received support from six of the world's largest banks: DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB.
Next-Level Infrastructure
Starting in October this year, MAS will begin offering gold storage services for foreign central banks, sovereign wealth funds, and international financial organizations. This will allow them to hold reserves directly in Singapore. Additionally, as part of tax incentives, the 5% limit on investments in physical precious metals for funds and family offices will be lifted. They will now be able to significantly increase the share of gold in their portfolios without previous bureaucratic obstacles.
According to Gan Kim Yong, the main systemic problem is that Asian traders are forced to adapt to Western hours. During local trading hours, liquidity drops, making it more difficult to conduct large institutional deals. The new system aims to act as a bridge, connecting Asian demand with global liquidity during daytime hours.
Race with Hong Kong
Singapore has a serious competitor. Hong Kong plans to launch its own gold clearing system as early as July this year, as well as resume trading in metal futures. Both hubs have secured support from major banks and are establishing ties with central banks. The outcome of this race will depend not only on the speed of launch but also on the depth of integration with global financial flows.
Notably, against this backdrop, DBS Bank, one of the participants in the Singapore system, is preparing to issue tokenized physical gold for retail clients. Its competitor OCBC is already actively buying, selling, and storing precious metals for institutional clients. This indicates that Singapore is betting not only on the wholesale segment but also on the retail segment, using technology to democratize access to gold.
Analyst Comment: Singapore demonstrates a rare example of a comprehensive approach: it is simultaneously creating physical infrastructure (storage, clearing) and digital tools (tokenization). If the project is implemented on time, it could lead to a fundamental shift in gold pricing, gradually moving the center of power from London to Asia. However, Hong Kong is not giving up, and in the next two years, we will witness fierce competition between the two financial centers for the right to become the region's main gold hub.