Asian Hubs Seeking to Usurp London as the Center of the Global Gold Trade

Singapore and Hong Kong are seeking to usurp London as the center of the global gold trade, another indication of the yellow metal’s shift from West to East.

Western markets – London, New York, and Switzerland –  have dominated the gold trade for nearly two centuries. However, with gold progressively flowing from West to East, Singapore and Hong Kong are developing the infrastructure to challenge Western dominance.

However, there are plenty of challenges.

The Reserve opened last year in Singapore. It features one of the largest maximum-security bullion vaults in the world, designed to hold up to 10,000 tonnes of silver and 500 tonnes of gold.

The goal is to lease space to private banks and family offices so they can store their wealthy clients’ precious metals holdings in a secure facility a short distance from Southeast Asia’s busiest airport.

So far, the facility only holds a fraction of the metal it was designed for. However, Singapore Bullion Market Association chief executive Albert Cheng told the Financial Times it’s only a matter of time before Asia begins to challenge London’s dominance.

“London took 200 years to build the infrastructure to become the center of the world gold market. We have lots of work to do, but it won’t take us that long.”

In addition to building new vaulting facilities, players in the Asian gold market are also expanding wholesale warehousing and refining capabilities. Meanwhile, Abaxx Exchange, a Singapore-based bourse, recently launched a gold futures contract.

The Shanghai Gold Exchange has also launched a renminbi-denominated gold contract. It opened an offshore vault in Hong Kong to support the contracts and help market them to foreign investors.

Hong Kong city leader John Lee recently announced plans to increase gold storage capacity in the city from the current 200 tonnes to more than 2,000 tonnes in three years. He said the goal was to create a “regional gold reserve hub”.

Abaxx chief economist David Greely said this all points to the fact that “the center for gold trading is increasingly moving East.”

“There is a big untapped demand for an Asian trading hub.”

Asian demand has been one of the primary drivers behind the recent gold rally that has seen the yellow metal gain more than 84 percent since January 2024.

For instance, in China, gold bar and coin demand grew by 44 percent year-on-year in H1. Chinese investors snapped up 115 tonnes of gold bars and coins in the second quarter alone. It was the strongest H1 for physical gold buying since 2013.

Meanwhile, year-on-year bar and coin demand in the U.S. plummeted by 53 percent. American investors bought a paltry 9 tonnes of gold coins and bars in Q2, the lowest quarterly total since 2019.

Trade uncertainty has increased the momentum to develop regional gold hubs in the East. A research analyst at a Swiss refinery told the Financial Times,

“There is a window for these hubs to explore ramping up their product availability.”

There are some obstacles facing those hoping to make Asia the center of the gold trade. Some Western players worry about political instability in the region. A former gold trader at JPMorgan and HSBC told the Times, “There is always this fear — is it a true international market, or is it something where, if the Chinese government didn’t like the result, they could change the rules?”

As a neutral country, Singapore doesn’t have as much political baggage.

At this point, both Hong Kong and Singapore have their pluses and minuses. Gregor Gregersen, founder of Silver Bullion, the company behind The Reserve, told the Times, “On the vaulting side, we are ahead in Singapore; on trading, I would say Hong Kong is ahead. Both hubs have realized that the world is changing, and they need to revisit their role when it comes to gold.”

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