Singapore’s push to become a major Asian gold hub is running into a very physical constraint: vault space.
According to reporting cited by Money Metals News Service and Bloomberg, demand for bullion storage in Singapore has increased as banks and investors position for more gold trading activity in Asia. The shift comes as gold-market infrastructure expands beyond longtime Western centers such as London, New York and Switzerland.
Banks Look for More Room
DBS Group Holdings, described in the source material as Southeast Asia’s top lender, has expanded its bullion storage capacity to support what it called “growing demand from both private wealth and institutional clients.”
The source material notes that it is unclear exactly how DBS is expanding capacity. Banks often contract with private vaulting facilities or logistics firms rather than building their own vaults.
Bloomberg also reported that OCBC Bank has approached precious-metals storage providers about securing additional space for clients, while Deutsche Bank is considering a similar move. An OCBC spokesperson told Bloomberg the bank has seen “steady interest” in its newly established physical gold business, especially among private banking clients.
‘Asia’s Fort Knox’ Faces Pressure
One focus of the storage squeeze is Le Freeport, a high-security Singapore facility sometimes referred to as “Asia’s Fort Knox.” Bloomberg reported that the facility is running out of room in its basement vaulting space.
That basement space is especially desirable because, according to people familiar with the matter cited by Bloomberg, it offers enhanced security and higher load-bearing capacity, allowing more gold bars to be stacked than on upper floors.
Bloomberg reported that Singapore has at least 2,200 tonnes of privately owned gold storage capacity, including about 1,700 tonnes at Le Freeport and 500 tonnes at The Reserve.
Singapore Prepares a Gold-Clearing System
The storage demand is also tied to expectations for a planned over-the-counter gold clearing system operated by the Singapore Exchange.
According to The Straits Times, the system is expected to be running by year-end, with interbank trading phased in next year. It is intended to standardize and streamline clearing and physical settlement for institutional 400-ounce bars and one-kilogram bars, which are preferred in parts of Asia.
The goal is to improve liquidity, price discovery and settlement during Asian trading hours, potentially strengthening Singapore’s role as a regional gold hub.
The Monetary Authority of Singapore has also said it will open its vaulting services to sovereign entities and foreign central banks, and plans to offer gold accounts to selected Singapore-based bullion banks. MAS does not disclose its vaulting capacity.
“This strengthens Singapore’s proposition as a jurisdiction where reserve assets can be securely held, actively managed and connected to wider market liquidity during Asian trading hours,” Deputy Prime Minister Gan Kim Yong said earlier this summer.
Hong Kong Is Building Too
Singapore is not alone. Hong Kong has also been expanding gold-market infrastructure.
Earlier this year, Hong Kong launched a revamped dollar-denominated futures contract and began trial operations of a gold clearing and settlement system. The source material says the government-owned clearing system is expected to “mirror” infrastructure used by the London Bullion Market Association.
Hong Kong has also reported record physical gold deliveries and plans to expand vaulting capacity to 2,000 tonnes within three years.
Taken together, the developments in Singapore and Hong Kong point to a gradual buildout of Asian gold-trading infrastructure as more activity shifts eastward.
