Singapore is launching a large-scale program to become the main hub for gold trading in Asia. Six of the world's largest banks have backed the idea, joining the creation of a new clearing system for physical gold stored on the island. In doing so, Singapore is entering into direct competition with Hong Kong, where its own clearing for the leading precious metal is planned for 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 government expects to take a leading position in the region: Asia accounts for 70% of global gold demand, yet key prices are still mostly set in London and New York.

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How Singapore is moving into the lead in gold

The Singapore Exchange will open an over-the-counter (OTC) clearing system for physical gold stored in Singapore as early as the end of 2026. Among the participants are DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC and UOB. The launch of interbank trading is expected from 2027.

From October, the Monetary Authority of Singapore will provide gold custody services for foreign central banks, so that foreign financial institutions and sovereign funds can hold their reserves in Singapore. As part of tax incentives, the 5% tax on investments in physical precious metals is also being abolished. Now funds and family offices will be able to build up their gold allocations in portfolios more freely.

What the Asian gold market lacks

Around 70% of annual global gold demand comes from Asian buyers, but the development of infrastructure to handle such volumes on the continent has so far been stalling. Gan Kim Yong called it a systemic problem that the main price benchmarks are set by London and New York. For Asia this is especially sensitive: during local trading hours liquidity falls, and large deals are harder to execute.

Source: BeInCrypto