Singapore challenges London: 70% of gold demand comes from Asia — new clearing system shifts the balance of power
A tectonic shift is brewing on the global stage of precious metals. Singapore is launching a large-scale program to become the leading gold trading hub in Asia. The idea has been backed by six of the world's largest banks, which have joined the creation of a new clearing system for physical gold stored on the island. This puts Singapore in direct competition with Hong Kong, which has its own clearing system for the main precious metal 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 fix.
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 allocation in 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 to handle 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.
Based on my data, OTC deals are better suited for large institutional operations than exchange-traded ones: they give participants more flexibility in timing and trading conditions. Singapore does not aim to completely displace existing markets. The authorities want 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 plans to launch its own gold clearing system in July and resume trading in gold 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 the precious metal for institutional investors in Singapore.
Which hub will capture the larger clearing volume, Hong Kong or Singapore, depends not only on the speed of launch. But already, six of the largest international banks are ready to support the Singapore system, which is a serious bid for commercial success.
Cryptalist Analysis: Shifting control over pricing to the Asian market is not just an infrastructure project but a paradigm shift. If Singapore successfully launches OTC clearing, it will set a precedent for the tokenization of physical assets, directly impacting digital currency and DeFi markets. Investors should closely watch this development—it is rewriting the rules of the game in global precious metals trading.