MAS strengthens Singapore’s gold hub role with custody service for up to 500 tonnes for central banks

Amid surging demand for gold investment, the Monetary Authority of Singapore (MAS) has announced the launch of a gold custody service for central banks.

It is also working with the Ministry of Finance (MOF) to introduce an enhanced goods and services tax (GST) framework for wholesale investment precious metals (IPM) gold market activities, expected to take effect in April next year.

Deputy Prime Minister and Minister for Energy, Trade and Industry (Trade) Gan Kim Yong said some institutions had already expressed interest in Singapore’s gold custody service. He stressed that Singapore did not intend to replace other gold hubs, but hoped to offer central banks another option.

In a statement on Tuesday (10 November), MAS said it had launched a central bank gold custody service to store gold reserves for foreign central banks, international financial institutions and sovereign entities.

MAS is also offering gold custody accounts to selected eligible bullion banks in Singapore. These banks have the expertise and experience to provide gold-related services and trading liquidity.

The gold will be stored in Singapore’s national currency vault, which can hold up to 500 tonnes of gold, with scope to expand capacity as demand grows. MAS could not disclose the vault’s location.

The statement said the service offered market participants another sovereign-backed gold custody option, combining secure, allocated gold custody, reliable service and efficient access to gold market liquidity during Asian trading hours.

Speaking to the media on Tuesday, DPM Gan said foreign investors and central banks were diversifying their portfolios amid growing uncertainty in the external environment, driving up demand for gold.

Singapore’s gold custody service would give foreign central banks and sovereign entities an additional option for storing their gold reserves.

DPM Gan said, “There are interests that have been expressed to us, and because these are confidential, I won't be able to share too much details on which particular central bank has approached us.”

He added, “Singapore has always been a financial hub, and we have built up a very strong credibility among the financial institutions as well as with our fellow central banks. I think we are in a strong position to be able to serve these central banks' needs, and we look forward to working with them.”

Hong Kong has also recently been actively strengthening its gold industry, including trialling a new central gold clearing system to make physical gold deposits, withdrawals and trading more convenient.

Asked whether Singapore would compete with Hong Kong, DPM Gan said this was not a zero-sum game, and that demand for gold as a reserve asset was expanding rapidly amid the uncertainties.

MAS and MOF will also build on existing GST measures for investment precious metals with an enhanced framework to support Singapore’s wholesale IPM gold market activities.

The enhanced framework will extend goods and services tax (GST) exemptions to specified investment precious metals-related services between institutional participants covered by the framework, such as gold storage, refining and recasting, gold assaying and gold brokerage services.

This will ensure that GST treatment better aligns with and supports the development of Singapore’s wholesale gold market activities. Details will be announced in Budget 2027.

Meanwhile, following the signing of a memorandum of understanding in June this year, Singapore Exchange (SGX) is working closely with six founding clearing banks to complete preparations for an over-the-counter gold clearing system by the end of this year. Industry testing has been completed, and the system’s rulebook is nearing completion.

Live trading and market operations are expected to begin in the first quarter of next year, with gold market liquidity expected to build gradually.

SGX’s Gold Kilobar Futures contracts are also expected to launch in the second quarter of next year.

The six clearing banks are DBS, OCBC, UOB, Deutsche Bank, ICBC Standard Bank, which is part of the Industrial and Commercial Bank of China, and JPMorgan.

The statement said, “Taken together, these initiatives will put in place the key building blocks for a deeper and more vibrant Singapore gold market, facilitate price discovery and risk management during Asian trading hours, while strengthening Singapore’s role as a trusted connector to established gold centres and global liquidity.”