Singapore challenges London: new gold clearing system shifts power balance in Asia
Singapore launches a large-scale program aimed at becoming the main gold trading hub in Asia. The idea has been supported by six of the world's largest banks — they have joined the creation of a new clearing system for physical gold that will be stored on the island. Thus, Singapore enters into direct competition with Hong Kong, which has its own clearing for the main precious metal scheduled 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 expects 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.
How Singapore is Taking the Lead 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. Participants include DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB. Interbank trading is expected to begin in 2027.
The Monetary Authority of Singapore will provide gold storage services for foreign central banks starting in October, allowing foreign financial institutions and sovereign funds to hold their reserves in Singapore. Also, as part of tax incentives, the 5% limit on investments in physical precious metals is being lifted. 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: during local trading hours, liquidity drops, 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, matching local demand with global liquidity during daytime hours. According to the World Gold Council, OTC transactions are better suited for large institutional operations than exchange-traded ones: they give participants more freedom 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 connections with central banks.
Gold has significantly appreciated this year — this has attracted the attention of institutional investors and intensified 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 the precious metal 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, the Singapore system is ready to be supported by six major international banks, which is a serious bid for commercial success.
Expert Comment: Singapore is betting not just on infrastructure, but on synergy with central banks and institutional investors. If the system starts operating within the stated timeframe, it could significantly change price dynamics in Asian markets and weaken the region's dependence on Western trading sessions.