Singapore challenges London: Asia, home to 70% of gold demand, gets its own clearing center
Singapore is launching a large-scale program aimed at becoming the leading gold trading hub in Asia. The idea has 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. Thus, Singapore is entering direct competition not only with London and New York but also with Hong Kong, where its own precious metal clearing is planned for 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 Gold Leader
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. The launch of interbank trading is expected from 2027.
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 in Singapore. Additionally, 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.
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 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 transactions more difficult.
According to Gan Kim Yong, Singapore does not seek to completely displace existing markets. The authorities want to turn the country into a connecting hub for the Asian region, bridging 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 metal futures. To this end, the city has secured support from several banks and established ties 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 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 claim for commercial success.
Cryptalist Analysis: This move by Singapore is not just an attempt to attract some of the flows. It is a strategic maneuver to create an Asian price-setting center, which in the long term could reduce the region's dependence on Western trading sessions. Given DBS's tokenization of gold, we are seeing a convergence of traditional markets with digital assets, opening new horizons for liquidity and accessibility of precious metals.