The Monetary Authority of Singapore has introduced a gold vaulting service with an initial capacity of 500 metric tons, targeting foreign central banks and sovereign entities. This initiative is part of a broader strategy that includes tax exemptions for various wholesale gold-related services, which aims to position Singapore as a key bullion hub as trading activity shifts towards Asia.
However, analysts like Juerg Kiener from Swiss Asia Capital express skepticism about Singapore's ability to compete with established markets, particularly London, which holds approximately 9,850 metric tons of gold.
While Singapore's political stability and legal framework may attract central banks looking to diversify their gold storage, the challenge remains in building sufficient liquidity and trading activity to support a fully functioning bullion market. The development of a physical gold clearing system, expected to launch in 2027, is also part of this strategy.
Analysts note that both Singapore and Hong Kong are still developing their local clearing infrastructures, which are essential for establishing deep trading ecosystems. The evolving dynamics of gold flows, with increased direct trading between Asian markets, could benefit Singapore, but its success will depend on its ability to create a competitive environment for bullion transactions