Singapore (Commonwealth Union)_ Singapore is poised to surpass London and New York as the global hub for gold, marking a significant shift of the precious metal’s center from West to East. Shaokai Fan, head of Asia-Pacific and global central banks at the World Gold Council, highlights this transformative trend. According to him, with burgeoning gold consumption in emerging Asian markets, Singapore’s strategic location places it at the nexus of this evolving market dynamic.
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Fan emphasized Singapore’s potential to lead the future gold market during the Asia Pacific Precious Metals Conference. He stated, “Singapore is poised to lead the gold market in the future”. Additionally, the city-state also accounts for nearly a quarter of the world’s gold mining output. The other major gold producers are China, Australia, the Philippines, Papua New Guinea, Laos, and Indonesia.
Given the escalating geopolitical tensions and Western economic sanctions, Fan advocated for establishing an official gold reserve center in the East. He cited Singapore as a viable alternative to New York and London, which are perceived as risky locales for storing gold under emergent conditions, where there is a risk of the gold being frozen or seized as a result of geopolitical tensions. Accordingly, Singapore’s stable governance and favorable tax environment further bolster its status as a premier gold trading hub, amplified by recent tax reforms and infrastructure enhancements. In particular, the elimination of GST on investment gold in Singapore and the establishment of good delivery refineries also support the city-state for gold trading.
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In Asia, the demand for gold remains robust despite soaring prices across multiple currencies. Accordingly, Asian buyers, seeking to be safe against economic uncertainty, have displayed resilience in their gold investments, which has also led to lower investments in other options like real estate and other equities. This trend is particularly evident in China, where demand for gold coins and bars surged despite substantial price increases in yuan terms. China is generally the world’s leading gold consumer. Similar patterns are also observed in Japan, Thailand, South Korea, India, and Vietnam, reflecting a regional preference for gold amid broader economic challenges. According to the World Gold Council, demand for gold coins and bars surged by 27 percent year-on-year in the first quarter of 2024.
India is the world’s second-largest consumer of gold. Despite increased price sensitivity among buyers, Indian demand for gold bounced back during a significant May festival, even amidst record prices in rupee terms. In India, investment in gold bars and coins rose by 19 percent compared to the previous year. Moreover, demand for bars and coins in China saw a significant 68 percent increase year-on-year, reaching 110 tons. Conversely, physical gold demand experienced a slight decline in both the US and European markets. As such, Western markets have shown restrained interest in physical gold amidst profit-taking and divergent investment behaviors compared to Asia. This contrast underscores the shifting global demand dynamics that align with Singapore’s ascension as a pivotal gold hub in the East.
