Singapore challenges London and Hong Kong: 70% of global gold demand is concentrated in Asia
Singapore is launching a large-scale program to transform itself into a major hub for physical gold trading in Asia, directly challenging London and New York. Six of the world's largest banks — DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB — have already supported the creation of a new over-the-counter (OTC) clearing system for the precious metal stored on the island.
On June 15, Deputy Prime Minister Gan Kim Yong presented a package of initiatives from the Singapore Exchange (SGX) and the Monetary Authority of Singapore (MAS). The key goal is to take a leading position in the region, which accounts for 70% of global gold demand. However, pricing is still dictated by Western platforms, creating a systemic imbalance for Asian buyers.
How Singapore Intends to Seize the Initiative
SGX will open an over-the-counter clearing system for physical gold stored in Singapore by the end of 2026. The launch of interbank trading is expected from 2027. In parallel, starting in October, MAS will begin offering gold storage services for foreign central banks and sovereign wealth funds to encourage the placement of reserves on the island.
As part of tax incentives, the 5% limit on investments in physical precious metals is being removed. Now, funds and family offices will be able to significantly increase the share of gold in their portfolios without administrative barriers. This is a critically important step, given that institutional investors are increasingly seeking safe-haven assets.
The Asian Paradox: Demand Exists, Infrastructure Does Not
About 70% of the annual global demand for gold comes from Asian buyers, yet the continent still lacks developed infrastructure to handle 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.
Singaporean authorities are not seeking to completely displace existing markets. Their goal is to turn the country into a connecting hub that matches local demand with global liquidity during daytime hours. Over-the-counter (OTC) deals are better suited for large institutional operations than exchange trading, as they give participants more flexibility in terms of timing and trading conditions.
Hong Kong is Not Asleep: The Battle for Asian Gold
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.
Notably, 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. This indicates a growing convergence of traditional gold markets and digital assets.
My expert conclusion: The outcome of the struggle between Singapore and Hong Kong for leadership in the Asian gold hub will depend not only on the speed of system launches but also on the ability to attract real liquidity volumes. The support of six global banks gives Singapore a serious advantage, but Hong Kong could leverage its proximity to China, the world's largest gold consumer. The market is clearly facing a tectonic shift, and traditional Western centers risk losing their dominant position.