Singapore, Hong Kong take rival paths to capture global gold trade

One builds MAS-backed vaulting for central banks, the other opens a pipeline to Shanghai.

Singapore and Hong Kong are pursuing different strategies to bolster their positions as precious metals hubs, with Singapore expanding clearing and vaulting services for international investors and Hong Kong building on its ties to Mainland China's bullion market.

Singapore is viewed as a neutral jurisdiction with established storage facilities and a strong wealth management sector, Dick Poon, general manager at Heraeus Precious Metals Hong Kong, said in an emailed reply to questions.

He said Hong Kong's advantage lies in its connection with Mainland China's bullion market through its integration with the Shanghai Gold Exchange.

Singapore's strategy gathered pace in June when Deputy Prime Minister and Monetary Authority of Singapore Chairman Gan Kim Yong announced at the Asia-Pacific Precious Metals Conference that Singapore Exchange Ltd. would launch an over-the-counter clearing system for Loco Singapore gold by the end of 2026.

The system will clear physical gold stored and settled in Singapore and will be backed by DBS Bank Ltd., Deutsche Bank AG, ICBC Standard Bank Plc, JPMorgan Chase & Co., Oversea-Chinese Banking Corp. Ltd., and United Overseas Bank Ltd.

Gan also said the Monetary Authority of Singapore would begin offering gold vaulting services to foreign central banks and sovereign entities from October 2026.

Singapore will remove the 5% cap on physical investment precious metals under selected tax incentive schemes for eligible funds and single-family offices, whilst Singapore Exchange is studying a physically deliverable gold futures contract.

Joshua Rotbart, founder of J. Rotbart & Co., said regulations are no longer the main factor separating Singapore and Hong Kong.

"The regulations are almost the same," he told Singapore Business Review via Zoom. "It's more about the nature of the market and the perception of risk."

He said investors typically choose Singapore for long-term gold storage and wealth preservation, whilst Hong Kong has developed into a trading centre serving Mainland China.

Singapore's latest measures build on work launched in March, when the Monetary Authority of Singapore and the Singapore Bullion Market Association formed the Gold Market Development Working Group to review clearing, settlement, storage, logistics, custody, and investment products.

Hong Kong has also stepped up efforts this year, but with a stronger focus on the mainland.

The Financial Services and the Treasury Bureau (FSTB) signed a cooperation agreement with the Shanghai Gold Exchange in January to develop a gold central clearing system and deepen cooperation between the two markets.

The government also plans to expand Hong Kong's gold storage capacity to more than 2,000 tonnes within three years.

The state-owned Hong Kong Precious Metals Central Clearing Company Ltd. held its first board meeting in April. Financial Services and Treasury Secretary Christopher Hui said preparations for the clearing system were progressing, with trial operations scheduled to begin this year.

The bureau also announced in June that the Shanghai Gold Exchange had opened its first International Board-certified offshore gold delivery vault in Hong Kong, letting international investors take delivery of eligible contracts outside Mainland China.

Albert Cheng, CEO at the Singapore Bullion Market Association, said Project Lion 2 aims to strengthen Singapore's gold market through improvements to clearing, storage, custody, and investment products.

"By strengthening clearing, custody, vaulting, and product development, we can complement existing centres and deepen institutional participation," he added.