Singapore challenges London and Hong Kong: new gold clearing system backed by six giants
Singapore is launching an ambitious program to become the leading gold trading hub in Asia. 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. Thus, Singapore is entering direct competition not only with London but also with Hong Kong, which has its own precious metal clearing planned for July this year.
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 issue that Singapore intends to resolve.
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. Interbank trading is expected to begin in 2027. The six participating banks will provide liquidity and the technological foundation.
Starting in October, the Monetary Authority of Singapore will offer gold storage services for foreign central banks, allowing foreign financial institutions and sovereign funds to hold their reserves in Singapore. 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 the annual global demand for gold comes from Asian buyers, but the continent still lacks developed infrastructure for such volumes. Gan Kim Yong described it as a systemic problem 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.
According to the World Gold Council, over-the-counter (OTC) transactions are better suited for large institutional operations than exchange-based ones: they give participants more flexibility in timing and trading conditions. Singapore does not aim to completely displace existing markets but wants 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 metal futures. To achieve this, the city has secured support from several banks and established connections with central banks.
Gold has significantly increased in price this year, attracting the attention of institutional investors and intensifying the rivalry between the two hubs. One of the participants 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 the 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.
Expert comment from Cryptalist: The shift of gold trading to Asia is an inevitable trend, given where the main demand is concentrated. However, Singapore's success will depend not only on infrastructure but also on its ability to offer competitive conditions compared to Hong Kong, which already has a developed financial ecosystem. In the short term, the winner will be the one that can ensure liquidity and institutional trust faster.