Singapore challenges London and Hong Kong: new gold clearing system set to shift the balance of power
Asia, which accounts for about 70% of global demand for physical gold, has long remained in the shadow of Western financial centers where key prices for the precious metal are set. Singapore has decided to radically change this situation by launching a large-scale program to transform the city-state into the region's main gold trading hub.
On June 15, Deputy Prime Minister Gan Kim Yong presented an ambitious package of initiatives developed jointly with the Singapore Exchange (SGX) and the Monetary Authority of Singapore (MAS). The key element will be the launch of an over-the-counter (OTC) clearing system for physical gold stored on the island. The project has already been supported by six of the world's largest banks: DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB. The system launch is scheduled for the end of 2026, with full-fledged interbank trading starting in 2027.
Why is this so important? Currently, the main price benchmarks for gold are set in London and New York, creating a systemic problem for Asian buyers. During local trading hours, liquidity drops, making large transactions difficult. Singapore aims to become the link that connects Asian demand with global liquidity during daytime hours.
Incentive Package for Institutions
In addition to creating the clearing system, Singapore's authorities are introducing a number of tax incentives. Starting in October, MAS will begin offering gold storage services for foreign central banks, sovereign wealth funds, and other financial institutions. This will allow them to hold their reserves directly in Singapore rather than in London or New York. Furthermore, the 5% limit on investments in physical precious metals for funds and family offices will be lifted, paving the way for a significant increase in the share of gold in portfolios.
Race with Hong Kong
Singapore is entering direct competition with Hong Kong, which plans to launch its own gold clearing system as early as July this year. Hong Kong is also resuming trading in precious metal futures and has secured support from several banks and central banks. The outcome of this race will depend not only on the speed of launch but also on the depth of liquidity. Singapore already has a significant advantage: the support of six global banks is a powerful signal to the market.
Analyst's comment: This is not just a battle for hub status. Creating its own pricing infrastructure in Asia is a fundamental shift that could reduce the region's dependence on Western markets. Singapore is betting on an institutional base and storage, which in the long term could make it more attractive to central banks than Hong Kong, which is focused on speculative trading. We are witnessing the dawn of a new era for the global gold market.