Singapore is on track to become a significant gold hub, according to the World Gold Council. The shift in global gold trading towards the east is one of the key reasons driving this move. With gold consumption on the rise in major emerging markets, particularly in Asia, Singapore is strategically positioned to capitalize on this trend. Shaokai Fan, the head of Asia-Pacific and global head of central banks, emphasized that Singapore’s proximity to these emerging markets, which are actively increasing their gold reserves, further solidifies its potential as a pivotal player in the gold market.
Central banks play a crucial role in driving the demand for gold, especially in countries like China and Japan. China, being the world’s largest gold consumer, has seen its central bank emerge as the top buyer of bullion in recent years. The People’s Bank of China’s significant gold purchases in 2023 highlight the country’s efforts to bolster its gold reserves. In comparison, Japan has shown resilience in gold demand, particularly in the jewelry sector. The recent report by the WGC revealed that Japan experienced the strongest first quarter gold jewelry demand since 2019. Furthermore, South Korea demonstrated a sharp increase in gold purchases, signaling a positive trend in the region.
Singapore’s geographical location plays a vital role in its ascent as a gold hub. The city-state is in close proximity to major gold mining centers, including China, Australia, Indonesia, and the Philippines. This strategic positioning allows Singapore to serve as a convenient access point for central banks and market participants looking to secure their gold reserves. Fan highlighted the growing importance of establishing an official gold reserve center amidst global geopolitical uncertainties. He underscored Singapore’s potential to rival traditional hubs like London and New York in offering secure gold vaulting services to central banks worldwide.
Several factors contribute to Singapore’s burgeoning role in the gold market. The removal of the Goods and Services Tax (GST) on investment grade precious metals by the Singaporean government since October 2012 has significantly boosted investor interest in the country. Additionally, the establishment of good delivery refineries in Singapore has enhanced its reputation as a leading gold trading hub. Fan stressed the country’s commitment to political stability as a further catalyst for its growth in the bullion market. As a result, Singapore is well-positioned to lead the future of the gold market and emerge as a key player in the industry.