Articles

Asian Hours

Singapore has set a date to build gold market infrastructure that runs in Asian hours and settles metal held on the island rather than in London or New York.

On 15 June 2026, the chairman of the Monetary Authority of Singapore announced that the Singapore Exchange will establish an over-the-counter (OTC) gold clearing system for locally vaulted (i.e. deposited in vaults) metal by the end of 2026, with interbank trading expected to develop from 2027.

The clearing system is the first concrete step in a sequence designed to move a larger share of the physical gold business toward Southeast Asia. Consequently, each later measure becomes easier to introduce once the settlement layer exists.

Clearing System

Clearing confirms a trade and ensures the metal and payment reach the right accounts.

An OTC market is one where banks deal directly rather than through a public exchange. The new system applies both functions to gold that physically sits in Singapore, a category the industry labels “Loco Singapore”. It supports the large bars used as the London institutional standard and the kilobars that dominate Asian demand, so a trade can settle against either in one venue.

Six bullion banks – namely DBS, Deutsche Bank, ICBC Standard Bank, J.P. Morgan, OCBC and UOB – signed on as clearing members.

Building the clearing layer first reflects how the business works. Vaulting without clearing is storage, and trading products without clearing have nowhere to settle. The settlement layer is the base that storage services, exchange-traded products and reserve management all require.

Sequence of Manoeuvres

The clearing system arrives with three companion measures, and the design indicates that more will follow.

The Monetary Authority of Singapore will introduce central bank gold vaulting services from October 2026, aimed at foreign central banks and sovereign funds, with gold accounts extended to selected local banks so official holders can actively manage reserves rather than leave them idle.

The Singapore Exchange is developing a physically deliverable gold futures contract, which would give the market a price discovery tool backed by metal that can be called for delivery. The government is also removing a 5% ceiling on how much physical gold its tax-incentivised investment funds and family offices may hold, a change that could release domestic demand that current rules suppress.

Read together, these measures form a deliberate progression rather than a single announcement. Settlement capacity supports storage. Storage attracts sovereign holders. Sovereign participation deepens liquidity. Deeper liquidity makes a deliverable futures contract viable, and a credible futures contract is the precondition for an Asian-hours reference price.

Singapore has not committed to that final objective publicly, yet the sequence it has begun leads there.

Rising Demand

The strategy rests on a demand base that has widened across several regions at once.

Asian consumers account for most global physical gold purchases, with China and India alone making up more than a third of consumer demand. The Gulf, led by Dubai, treats allocated and segregated storage as the default rather than a premium service.

Demand is also rising among retail and institutional buyers across Africa and South America, where currency instability and inflation have renewed interest in tangible stores of value. Many of these buyers sit closer to Singapore than to the Atlantic centres in terms of geography and trading hours.

Official demand reinforces the pattern. Central banks bought 863 tonnes of gold in 2025, the fourth-largest annual total on record, led by the National Bank of Poland. Much of this accumulation hedges the risk that reserves held in Western jurisdictions can be frozen, a concern that intensified after Russian central bank assets were frozen in 2022.

A neutral Asian-hours venue offering allocated storage and active reserve management suits holders that want exposure to gold without exposure to either side of the rivalry between the United States and China.

Why the Western Position Is Exposed

The opening Singapore is working to fill exists because the established centres price gold on a different principle than many of the buyers now driving demand.

London and New York operate largely on a credit model.

Most gold traded in London sits in unallocated accounts, which represent a claim against a bullion bank rather than title to a specific bar, and the New York futures market settles only a small share of contracts with physical delivery. This produces large paper liquidity that functions without difficulty under normal conditions.

The model shows strain when many buyers ask for metal at once. In early 2025, concern over potential United States tariffs triggered a rush to move bars into New York warehouses, where inventory rose roughly 153% between November 2024 and March 2025. The spread between New York futures and London spot widened well beyond normal levels, and the withdrawal queue at the Bank of England extended to several weeks.

A tariff exemption in April 2025 reversed the flow, and metal left the United States in volume, with gold exports reaching US$17.88b in February 2026 as Hong Kong overtook the United Kingdom as the second-largest destination.

The episode showed that the Atlantic markets can withstand a delivery surge and that the physical demand driving it now sits in the East. The allocated, physically settled model Singapore is building is designed for buyers who treat that distinction as decisive.

Constraints and Competition

The established centres retain advantages that infrastructure cannot quickly displace. The London benchmark, set through twice-daily auctions, remains the reference price written into contracts worldwide, and London clearing depth is substantial, with net clearing that averaged US$74.2b per day in April 2026.

Liquidity also depends on prior liquidity, because trading concentrates where activity already exists. Singapore learned the difficulty of building a market by decree when a 2014 contract built around a 25-kilogram lot failed to attract any traders and was suspended. The redesign around kilobars and OTC clearing reflects that lesson.

Singapore is also not the only Asian centre competing for this role. Hong Kong is building a government-owned clearing company linked to mainland China and to the Shanghai Gold Exchange, which opened its first offshore vault in Hong Kong in June 2025. The Hong Kong model is tied to renminbi settlement and the broader effort to build channels outside the dollar.

Singapore’s position rests on the opposite quality – neutrality – that appeals to holders that want Asian infrastructure without alignment to Beijing. J.P. Morgan sits as a clearing member in both cities, a sign that the largest institutions are positioning themselves in each rather than choosing between them.

Outlook

The initiative is best read as a reallocation of physical trade and storage unfolding over years, not an immediate challenge to where gold is priced. The benchmark will likely remain in London through the medium term, and the clearing system’s decisive measure is adoption rather than launch.

Genuine interbank liquidity from 2027 would confirm the model, and its absence would repeat the outcome of 2014. For reserve managers, the vaulting service offers a credible neutral alternative to storage in London, New York and Switzerland, though its traction will be measured by the sovereign placements actually announced.

The conditions that would signal a deeper shift are identifiable: renewed settlement stress in the Western market, a sovereign holder moving its reference pricing to an Asian venue or trading volumes in Singapore, Hong Kong, and Shanghai converging toward London.