Singapore challenges London: Asia controls 70% of gold demand, but prices are dictated by the West
Singapore is launching a large-scale program to become the main gold trading hub in Asia. The idea has been supported by six of the world's largest banks — DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB — which have joined in creating a new clearing system for physical gold that will be stored on the island. Thus, Singapore is entering direct competition with Hong Kong, where its own clearing system for the main precious metal is 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-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.
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.
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, under 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 annual global gold demand comes from Asian buyers, but the continent still lacks developed infrastructure for such volumes. Gan Kim Yong identified as a systemic problem the fact that key 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 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. 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 gold futures. To this end, the city has secured support from several banks and established connections with central banks.
Gold has significantly appreciated 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 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, six major international banks are ready to support the Singapore system, which is a serious bid for commercial success.
Analyst Comment: The flow of liquidity to Asia is an inevitable process, and Singapore looks like the favorite here. Support from global banks and the creation of infrastructure for central banks give it an advantage over Hong Kong, which is currently lagging in terms of timing. However, the decisive factor will be the speed of tokenization implementation — it is this that could attract retail investors and make the market truly mass-market.