Singapore challenges London and Hong Kong: a new clearing system for Asian gold
Singapore is launching a large-scale program to become the main gold trading hub in Asia. Six of the world's largest banks have supported the creation of a new clearing system for physical gold stored on the island. Thus, Singapore is entering direct competition with Hong Kong, which has its own precious metal clearing 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. Interbank trading is expected to begin in 2027.
Starting in October, the Monetary Authority of Singapore will provide gold storage services for foreign central banks, 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 will be removed. Funds and family offices will now be able to more freely increase their gold portfolio share.
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 key price benchmarks are set in 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 aim to completely displace existing markets. The authorities want to turn the country into a connecting hub for the Asian region, linking local demand with global liquidity during daytime hours. Over-the-counter (OTC) deals are better suited for large institutional operations than exchange-traded ones: they give participants more flexibility in 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 connections with central banks.
Gold has risen significantly in price this year, attracting institutional investors and intensifying competition 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 bid for commercial success.
Cryptalist Analytical Commentary: Singapore's initiative is not just an attempt to pull the blanket over itself, but a strategic step to reshape the global gold market. Singapore offers infrastructure that eliminates the time gap between Asian demand and Western pricing. If the project succeeds, it could lead to the emergence of a new global gold pricing standard, posing a serious challenge to London's LBMA and New York's COMEX. This is worth watching very closely.