Singapore has launched a state-backed gold vaulting facility and unveiled a sweeping package of tax incentives, marking its most ambitious attempt yet to carve out a meaningful share of the global bullion market from established Western centres. Gold prices continue to hover around $4,000 per ounce, coming substantially off highs, even as forecasts for next year remain bullish.
The Monetary Authority of Singapore officially opened its central bank gold vaulting service on November 10, offering foreign sovereign entities a politically neutral, Asian time-zone alternative to traditional storage hubs in London and Switzerland.
Paired with planned Goods and Services Tax exemptions for wholesale precious metals services and a new OTC clearing system set to go live in early 2027, the initiative represents a coordinated, multi-year infrastructure play.
What Happened?
The centrepiece of Singapore’s strategy is the new sovereign vault, housed within the MAS national currency facility and offering an initial storage capacity of 500 metric tons. Access is restricted to foreign central banks, sovereign wealth funds, international financial institutions, and a select group of Singapore-based bullion banks. The MAS has indicated that capacity can be expanded as demand warrants, though no anchor depositors have been publicly disclosed at this stage.
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To put the scale in context, London vaults held approximately 9,850 metric tons of gold at the end of October 2026, encompassing both commercial and central bank storage. Singapore’s initial 500-ton capacity represents roughly five percent of London’s current holdings, underscoring both the ambition of the project and the distance it has yet to travel to meaningfully challenge the City’s incumbency.
On the fiscal side, the Ministry of Finance confirmed that GST exemptions will be extended to a broad suite of wholesale gold services, including vaulting, refining, recasting, assaying, and broking, effective April 2027 pending final details in Budget 2027. Physical investment gold imports were already GST-exempt in Singapore, but secondary processing and institutional service fees had previously attracted tax friction that disadvantaged the city-state relative to London and Zurich.
The new framework is designed to achieve full tax neutrality for so-called Loco Singapore gold transactions, the term used for bullion priced and settled in Singapore, in much the same way that Loco London contracts underpin the global OTC market.
The next part of the strategy is the SGX OTC physical gold clearing system, developed in partnership with six founding clearing banks: DBS, Deutsche Bank, ICBC Standard Bank, J.P. Morgan, OCBC, and UOB. Industry testing has been completed and live operations are scheduled to begin in Q1 2027.
SGX is additionally targeting Q2 2027 for the launch of physically deliverable Gold Kilobar Futures, a contract designed to serve the Asian preference for 1-kilogram, 9999-fine gold bars rather than the 400-troy-ounce London Good Delivery standard. Asia accounts for roughly 70 percent of global physical consumer gold demand, driven primarily by China and India, yet the region has historically lacked a unified OTC clearing standard, leaving settlement fragmented across Asian trading hours.
Central banks purchased 321 metric tons of gold in Q3 2026 alone, according to World Gold Council data, sustaining a multi-year trend of reserve diversification that has been partly driven by concerns over the weaponisation of dollar-denominated assets and Western financial infrastructure. For sovereign buyers in Asia, the Middle East, and parts of the Global South, a MAS-operated vault in a politically stable, legally robust jurisdiction offers a genuinely differentiated custody proposition compared with storing gold in London or New York.
The combination of sovereign custody, tax-neutral processing, and standardised clearing creates the necessary conditions for a functioning Loco Singapore market, but the sufficient condition, namely deep, committed liquidity from major bullion banks and trading houses, will take considerably longer to develop.
