Singapore opens a 500 tonne national gold vault to foreign central banks and cuts GST on wholesale gold: its bid to rival London, New York and Hong Kong

Can foreign central banks now keep their gold in Singapore? Yes. The Monetary Authority of Singapore launched a gold vaulting service on Tuesday 10 November that lets foreign central banks, sovereign entities and multilateral organisations store bullion in Singapore's national currency vault, which can hold up to 500 tonnes, with room to expand as demand grows, The Business Times reported.

The vault is one piece of a broader plan. Singapore will also waive GST on wholesale gold services between institutions from April 2027, and its exchange is preparing a gold clearing system and new futures contract for 2027. Together they are designed to turn Singapore into a serious gold trading hub in Asian hours, competing for business now concentrated in London and New York, and against an ambitious push by Hong Kong.

What MAS has launched

The vaulting service, first announced in June, is open to foreign central banks, sovereign entities and multilateral organisations set up by governments or central banks. Gold will be held in the national currency vault, the secure facility that already protects Singapore's own reserves and currency. It complements more than 2,000 tonnes of commercial vaulting capacity that serves bullion banks and institutional investors.

"With the growing demand for gold as a reserve asset, central banks are also looking for alternatives, looking for more options to strengthen their resilience in terms of their gold reserves," said Deputy Prime Minister Gan Kim Yong, who chairs MAS. He said some foreign central banks had expressed interest, but declined to name them because the discussions were confidential.

MAS will also offer gold custody accounts to selected Singapore based bullion banks with expertise in gold services and trading liquidity. That allows central banks to store gold in Singapore while trading and managing it through established banks, a set up similar to how central banks use the Bank of England and commercial banks in London today.

Why central banks want new places to store gold

Central banks have bought gold at a rapid pace in recent years as geopolitical tensions and worries about government debt have boosted its appeal as a reserve asset and a way to diversify away from the dollar. Many hold their gold in a few traditional centres, especially London and New York, and some want alternatives closer to home or in politically neutral locations.

Singapore's pitch is reliability. It offers a stable legal system, strong rule of law, a central bank with a long record of managing reserves, and a location in Asian time zones. Gan stressed that Singapore does not aim to replace other centres. "What Singapore is doing is to offer an additional option to the central banks who are interested in looking for alternative venues to store their gold reserves," he said.

Gold's price has swung sharply this year, from record highs to recent lows below 4,000 dollars, as we covered in our report on gold's fall below 4,000 dollars. Prices fell again this week as hotter than expected US inflation data lifted the dollar. But central bank demand is driven by long term reserve strategy rather than short term price moves.

Gold has always followed trust. Singapore is betting that in a more divided world, central banks will want a neutral vault in Asian hours.

The GST change and the clearing system

The second pillar is tax. MAS and the Ministry of Finance will introduce an enhanced GST framework under which tax will be waived on specified services between institutional participants, such as vaulting, refining, recasting, assaying and broking. Gan said this reflects the fact that wholesale gold is traded among institutions "and is not for domestic consumption". The change is expected from April 2027, with details in Budget 2027.

OCBC's head of global markets, Kenneth Lai, said the change "will reduce transaction costs" and support Singapore's position as a gold trading hub in Asia. He added that amid geopolitical uncertainty, clients increasingly value the ability to hold physical bullion locally and transact through a trusted Singapore institution.

The third pillar is market plumbing. Industry testing of the Singapore Exchange's over the counter gold clearing system has been completed, and live trading is expected in the first quarter of 2027. It follows a June agreement between SGX and six clearing banks: DBS, Deutsche Bank, ICBC Standard Bank, JPMorgan, OCBC and UOB. The system will clear both kilobars, the one kilogram bars favoured in Asia, and 400 ounce large bars, the London institutional standard.

Singapore versus Hong Kong

Hong Kong is pursuing the same goal. It has said it aims to raise its gold storage capacity more than tenfold to over 2,000 tonnes by 2030 and plans to launch its own gold clearing and settlement system in the first quarter of 2027, the same window as Singapore. Asked about competition, Gan said "it's not a zero sum game".

The two centres have different strengths:

• Hong Kong has closer links to mainland China, the world's largest gold consumer
• Singapore offers a neutral jurisdiction and its national vault for central banks
• both are building clearing systems to capture Asian hours price discovery
• both aim to pull trading volume from London and New York

There is room for more than one Asian gold hub, but liquidity tends to concentrate. Whichever centre attracts the most trading in 2027 may set the regional benchmark price for years, which is why both are moving so quickly.

What it means for investors and the region

For investors, more Asian infrastructure should mean better price discovery and risk management during Asian trading hours, when London and New York are closed. SGX's physically deliverable gold kilobar futures, targeted for the second quarter of 2027, would give traders a new local contract linked to real metal.

For Singapore's economy, Gan said the initiatives will "anchor new high value activities across trading, risk management, custody and professional services" and create good jobs. Gold vaulting, refining and trading support well paid roles in finance, logistics and security.

For Southeast Asian central banks, a vault in the region offers a practical option if they want to hold more gold closer to home. Several Asian central banks have increased gold reserves in recent years, a trend we examined in our analysis of Asia's gold split between central banks and consumers.

Singapore's gold strategy is now in place: a sovereign grade vault, lower costs for the wholesale trade and a clearing system that will start in early 2027. The bet is that a more divided world wants more places to keep its gold, and that Asia deserves a trading hub of its own. Hong Kong is racing for the same prize, and 2027 will show which city central banks and traders choose.