Singapore challenges London: Asian giant aims to control 70% of global gold demand
Singapore is launching an ambitious program to transform itself into Asia's leading gold trading hub. Six of the world's largest banks — DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB — have already joined the creation of a new clearing system for physical gold that will be stored on the island. This is a direct challenge not only to Hong Kong but also to traditional Western hubs — London and New York.
Deputy Prime Minister Gan Kim Yong presented a package of initiatives from the Singapore Exchange and the Monetary Authority of Singapore. The key goal is to take a leading position in the region, as Asia accounts for 70% of global gold demand. However, the paradox is that key prices for the precious metal are still set in London and New York, creating inconveniences for Asian traders.
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. Interbank trading is expected to begin in 2027. Concurrently, the Monetary Authority of Singapore will offer gold storage services for foreign central banks starting in October, 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 identified as a systemic problem the fact 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. Singaporean authorities are not seeking to completely displace existing markets but aim to turn the country into a connecting hub for the Asian region, matching local demand with global liquidity during daytime hours.
The race for leadership in the Asian gold hub
Singapore has an active competitor — Hong Kong, which plans to launch its own gold clearing system and resume trading in gold futures as early as July. Both hubs are vying for the right to become the region's main trading center, and the outcome of this race will depend not only on the speed of launch but also on the commercial attractiveness of the infrastructure. Currently, six major international banks are ready to support the Singaporean system — a serious bid for success.
My view: Singapore's initiative is not just an attempt to pull the blanket over itself but a logical response to the structural imbalance of the market. While 70% of demand is in Asia and prices are set in London, trading efficiency suffers. If Singapore can offer real liquidity during Asian hours, it will fundamentally change the landscape of the global gold market.