Singapore challenges London: a new gold clearing system reshapes the balance of power in Asia
Singapore launches a large-scale program to become the main gold trading hub in Asia. The key idea is to create its own over-the-counter (OTC) clearing system for physical gold stored on the island. The project has already received support from six of the world's largest banks: DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB. Thus, Singapore is entering direct competition not only with London and New York, but also with Hong Kong, which is also preparing to launch its own clearing system as early as 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. This is a systemic problem that Singapore intends to solve.
How Singapore is becoming a leader in gold
The Singapore Exchange will open an over-the-counter clearing system for physical gold stored in the country by the end of 2026. The launch of interbank trading is expected from 2027. Starting in October, the Monetary Authority will provide gold storage services for foreign central banks, sovereign wealth funds, and foreign financial institutions. As part of tax incentives, the 5% limit on investments in physical precious metals is removed — funds and family offices will now be able to freely increase the share of gold in their portfolios.
What the Asian gold market lacks
About 70% of the annual global gold demand comes from Asian buyers, but the continent still lacks developed infrastructure for such volumes. The main price benchmarks are set by London and New York, which is particularly sensitive for Asia: during local trading hours, liquidity drops, making large transactions more difficult. According to the World Gold Council, over-the-counter transactions are better suited for large institutional operations than exchange-traded ones, as 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 as early as July and resume trading in gold futures. The city has secured support from several banks and established ties with central banks. The significant rise in gold prices this year has attracted the attention of institutional investors and intensified rivalry between the two hubs. One participant in the Singapore system, DBS, is preparing to issue tokenized physical gold for retail clients, while its competitor OCBC already buys, sells, and stores precious metals for institutional investors in Singapore.
My analysis: The key factor for Singapore's success is not the speed of launch, but the depth of support from global banks. Six of the largest international players have already confirmed their participation, giving the project a significant commercial advantage. However, Hong Kong, with its historical ties to mainland China and an earlier launch, could seize the initiative. The outcome of this race will determine not only the future of the Asian gold market but also global liquidity flows.