Singapore is poised to become a prominent hub in the global gold market as trading dynamics shift towards Asia, according to insights from the World Gold Council (WGC). This development is attributed to rising gold consumption in major emerging economies, predominantly located in Asia, and Singapore’s strategic proximity to these markets.
Shaokai Fan, Head of Asia-Pacific and Global Head of Central Banks at the WGC, highlighted at the Asia Pacific Precious Metals Conference that the “center of gravity” in the gold market is moving eastward. Singapore’s advantageous position near central banks with increasing gold reserves is a key factor. “The center of gravity of the gold market has shifted east, with Singapore, fortuitously placed as the potential fulcrum of this new balance,” Fan stated.
The rise in gold consumption in Asia is particularly driven by China, the world’s largest gold consumer. The People’s Bank of China led central banks in gold acquisitions throughout 2023 as it aims to bolster its gold reserves. Japan also demonstrated strong gold demand, recording its highest first-quarter jewelry consumption since 2019. South Korea saw a significant quarterly increase in gold purchases, the sharpest in over two years, reflecting a robust regional appetite for gold.
Singapore’s proximity to about 25% of global gold mining operationsâincluding key producers in China, Australia, Indonesia, the Philippines, Papua New Guinea, and Laosâfurther cements its potential as a gold trading hub. This geographical advantage, combined with Singapore’s political stability and favorable tax policies, makes it an attractive center for gold trading and storage.
The exemption of the Goods and Services Tax (GST) on investment-grade precious metals since October 2012 has been a crucial factor in enhancing Singapore’s appeal. This tax exemption, alongside the establishment of good delivery refineries, has bolstered Singaporeâs standing in the bullion market.
Fan pointed out the growing concern among central bankers worldwide about the need for reliable gold reserve centers, especially amid geopolitical volatility. He suggested that Singapore could emerge as a credible alternative to traditional hubs like London and New York for central bank gold vaulting.
“Singapore is poised to lead the gold market in the future,” Fan asserted, underscoring the country’s commitment to fostering a conducive environment for gold trading through regulatory measures and strategic positioning.
In summary, Singapore’s evolution into a leading gold hub is propelled by its strategic location near significant gold consumers and producers, supportive governmental policies, and the increasing gold demand in Asia. As the global gold market reorients eastward, Singapore is well-placed to capitalize on this shift and reinforce its role in the precious metals industry.
