Singapore challenges London: new gold clearing system reshapes Asia's power dynamics
Singapore is launching a large-scale program aimed at becoming the leading gold trading hub in Asia. The idea has been backed by six of the world's largest banks, which have joined the creation of a new clearing system for physical gold that will be stored on the island. Thus, Singapore is entering direct competition with Hong Kong, which plans its own clearing system for the main precious metal in July.
On Monday, 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 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 offer 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 the share of gold in their portfolios.
What the Asian gold market lacks
About 70% of annual global gold demand comes from Asian buyers, but 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 in London and New York. This 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 (OTC) transactions are better suited for large institutional operations than exchange-traded ones: they give participants more flexibility in terms of timing and trading conditions. It is this OTC system that Singapore is launching, betting on flexibility and convenience for institutional players.
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 risen significantly in price this year, attracting the attention of institutional investors and intensifying the rivalry between the two hubs. 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 precious metals 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, six of the largest international banks are ready to support the Singapore system, which is a serious bid for commercial success.
Expert opinion: Asia's transition from a consumer to a price-setter in the gold market is a tectonic shift that will reshape global liquidity flows. By combining world-class banking infrastructure with tax incentives and storage facilities, Singapore is creating an ideal foundation for a new financial center. Hong Kong is not giving up, but Singapore's focus on institutional OTC clearing and the support of six global banks looks more pragmatic and scalable.