Singapore challenges London: Asia is ready to seize control of the gold market
Singapore launches a large-scale program to transform into a major gold trading hub in Asia. The idea has received support from six of the world's largest banks — they have joined the creation of a new clearing system for physical gold stored on the island. Thus, Singapore enters direct competition with Hong Kong, which plans its own clearing of the main precious metal for July.
On 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 becoming a leader 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, 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 allocation.
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 hub for the Asian region, connecting 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 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 ties with central banks.
Gold has significantly appreciated this year — this has attracted the attention of institutional investors and intensified 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 a larger clearing volume, Hong Kong or Singapore, depends not only on the speed of launch. But already, the Singapore system has the backing of six major international banks, which is a serious bid for commercial success.
Cryptalist analyst's opinion: The shift of Asian gold demand to local clearing is not just an infrastructure project but a tectonic shift in the global financial architecture. Singapore and Hong Kong are competing not for volumes but for the right to set the price of gold during the most active trading period. The winner of this race will gain control over pricing for 70% of the global market.