Singapore challenges London and Hong Kong: a new era of gold clearing in Asia
The Asian gold market is undergoing a tectonic shift. Singapore has officially launched a large-scale program to transform itself into the region's main hub for physical gold trading. This move directly challenges the dominance of London and New York, while also entering into fierce competition with Hong Kong, which is preparing its own clearing system as early as July.
The key element of the strategy is the creation of an over-the-counter (OTC) clearing system for physical gold stored on the island. The project, which will be operational by the end of 2026, has already secured support from six of the world's largest banks: DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB. Interbank trading within the new system is expected to begin in 2027.
Deputy Prime Minister Gan Kim Yong presented a package of initiatives from the Singapore Exchange and the Monetary Authority of Singapore. The logic is simple: Asia accounts for about 70% of global gold demand, yet pricing is still dictated by London and New York. This creates a systemic problem: liquidity drops during Asian trading hours, making large transactions more difficult.
Singapore does not aim to completely displace existing markets. Instead, it seeks to become a bridge that connects local demand with global liquidity during daytime hours. To this end, starting in October, the Monetary Authority will begin offering gold storage services for foreign central banks and sovereign funds. Additionally, as part of tax incentives, the 5% limit on investments in physical precious metals for funds and family offices will be removed.
Hong Kong, for its part, plans to launch its own gold clearing system as early as July and resume trading in metal futures. However, Singapore has a significant advantage: the support of six heavyweight international banks.
My expert view: This move by Singapore is not just an attempt to pull the rug out from under others. It is a sign of the maturity of the Asian financial market and its pursuit of pricing sovereignty. For investors, this means the emergence of a new, more liquid, and time-zone-friendly instrument for working with gold. Competition between Singapore and Hong Kong will inevitably lead to lower costs and increased transparency, benefiting all market participants.