A solid gold bar model captured in Shanghai, China on March 15, 2026.
Photo | Future Publishing | Getty Images
Singapore is stepping up efforts to become a major player in the global gold market, betting that new central bank custodial services and tax incentives will help attract more bullion flows.
The Monetary Authority of Singapore on Tuesday launched gold storage services for foreign central banks and sovereign entities with an initial capacity of 500 tonnes.
The city-state also plans to introduce tax exemptions for certain gold wholesale-related services, such as storage, refining, recasting, testing and brokering. In June, Singapore announced plans for a physical gold clearing system to facilitate the settlement of bullion transactions in the city-state, which is expected to go live in the first quarter of 2027.
The initiative marks the country’s latest bid to establish itself as a major bullion hub alongside established centers such as London and Switzerland as gold trading activity shifts towards Asia.
But breaking into a market dominated by established trading hubs can be an uphill battle. For example, there were approximately 9,850 tonnes of gold stored in London vaults at the end of October, including commercial and central bank storage.
The pressure from Singapore comes as rival Hong Kong is also taking advantage of its proximity to China, the world’s largest gold market, to expand its gold storage and clearing infrastructure.
“Singapore is very much behind the party in terms of trade support structures because building a physical hub requires a lot of volume,” said Jürg Keener, chief investment officer at SwissAsia Capital.
“The biggest gold market is China and its window to the world is Hong Kong,” he told CNBC, adding that Singapore was not in a position to compete with Hong Kong in gold-backed trade.
Keener said Singapore could instead carve out a niche market for physical gold storage for financial institutions, although commercial vault services are already available in the city-state, including the high-security freeport near Changi Airport.
Custody Ambition
Unlike commercial vaults, this new facility will be operated by the Central Bank of Singapore and will provide foreign monetary authorities with an alternative custodian for gold.
“We don’t see this happening very often in the gold market or in the central banking community,” said Xiaokai Fan, global head of central banks at the World Gold Council.
The move comes as central banks are increasingly reviewing where their bullion is stored amid geopolitical tensions, Huang said. A World Gold Council report released in September said several countries had diversified their gold storage over the past 12 months, and many were planning to do so.
Singapore’s political stability, strong legal framework and extensive air connectivity could make it an attractive alternative to traditional storage centres, he added.
Metals Focus managing director Nicholas Cavallis said sovereign custodial services were an important addition to Singapore’s existing gold infrastructure, but cautioned that custodianship alone is not enough to establish a fully functioning bullion market.
The bigger challenge is building enough liquidity and trading activity to compete with London, which remains the dominant player in the global over-the-counter gold market.
Mr Cavallis said both Singapore and Hong Kong were still developing their local clearing infrastructure, meaning neither had yet established the kind of rich trading ecosystem that would support London’s dominance.
Attracting central bank gold could help boost Singapore’s liquidity, especially if locally held bullion can be mobilized for trading rather than just being stored.
growth potential
Singapore’s efforts come at a time when the flow of money has already undergone major changes over the past decade.
Historically, much of the world’s bullion moved through London and Switzerland, where large gold bars were traded or refined before being shipped to Asian markets.
However, the expansion of Asian refineries and growing regional demand are allowing gold to move directly between Asian markets, reducing dependence on European trading centers, Cavallis said.
The development of more sophisticated gold hubs in Asia could accelerate that change.
Still, Cavallis said Hong Kong may have an advantage in serving central banks and institutions whose financial activities are closely linked to China, while Singapore could appeal to those already active in banking and financial markets.
Fans see room for growth for both centers. “We think the two centers complement each other and don’t really compete,” he said.
Singapore’s Deputy Prime Minister Gan Kim Yong similarly rejected suggestions that the two financial hubs were seeking a bigger share of the same pie. “This is not a zero-sum game,” Gan said on Tuesday, adding that Singapore’s vault service would provide the central bank with new options to diversify its holdings of foreign exchange reserves.
It remains to be seen whether Singapore can translate its reputation as a reliable financial center into meaningful bullion flows. “It’s a chicken-and-egg story, because to get volume you need liquidity, but to get liquidity you need volume,” Huang said.
