Singapore challenges London: Asia generates 70% of gold demand — a large-scale clearing project launched
Singapore has officially announced the launch of an ambitious program to transform itself into a leading hub for physical gold trading in Asia. On June 15, Deputy Prime Minister Gan Kim Yong unveiled a package of initiatives backed by six of the world's largest banks: DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC, and UOB. These financial giants have joined forces to create a new over-the-counter (OTC) clearing system for gold stored on the island. Thus, Singapore enters direct competition with Hong Kong, which has its own precious metals clearing system planned for July.
A key factor behind this move is a massive imbalance: 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 institutional deals difficult. Singapore aims to become the link that connects local demand with global liquidity during daytime hours.
Infrastructural Breakthrough: From Storage to Trading
The Monetary Authority of Singapore (MAS) will begin offering gold storage services for foreign central banks and sovereign wealth funds starting in October. This will allow global reserves to be physically located in Singapore. Concurrently, under tax incentives, the 5% limit on investments in physical precious metals is being removed — funds and family offices will now be able to freely increase the share of gold in their portfolios.
The clearing system itself for physical gold stored on the island will be operational by the end of 2026. Interbank trading based on it is expected from 2027. This will give participants more flexibility in terms of timing and conditions than exchange trading, which is critically important for large institutional operations.
Race for Asian Leadership: Singapore vs. Hong Kong
Singapore does not seek to completely displace existing markets but aims to carve out a niche as a regional hub. However, competition is fierce: Hong Kong plans to launch its own gold clearing system as early as July, having secured support from several banks and established ties with central banks. The rise in gold prices this year has only fueled institutional interest and intensified the rivalry between the two hubs.
Notably, participants in the Singapore system are already actively innovating. DBS is preparing to issue tokenized physical gold for retail clients, while OCBC already buys, sells, and stores precious metals for institutional investors in Singapore.
Cryptalist Analytical Commentary: The support of six systemically important banks is not just a statement of intent but a serious commercial foundation. However, Singapore's success will depend not on the speed of launch, but on its ability to offer better liquidity and lower costs than Hong Kong. In the long term, winning this race could redistribute global flows of physical gold, weakening London's monopoly on pricing.