The World Gold Council (WGC) and the Singapore Bullion Market Association (SBMA) have announced an initiative aimed at transforming Singapore into a leading gold hub in Asia. This collaboration aims to leverage the region’s growing influence in the global gold market and enhance the city’s role in bullion trading.
Asia’s Rising Influence in Gold Market
Chen Qinghan, the Central Banks and Public Policy Lead at the WGC, emphasized the shift in the gold market towards Asia due to the region’s substantial increase in gold buying. “The rapid rise of Asia as the largest source of gold buying has moved the centre of gravity of the market, and this has created an opportunity for an international gold hub in Asia,” he noted.
Shaokai Fan, WGC’s head of Asia-Pacific and global head of central banks, reiterated this sentiment, highlighting Singapore’s potential to rival established gold markets like London and New York. This development is driven by the escalating demand for gold among Asian central banks, which see the necessity for a robust official gold reserve centre.
Surge in Asian Bullion Demand
The WGC has observed a notable increase in bullion demand across Asia, driven by consumers’ efforts to safeguard their wealth and purchasing power. Despite the recent news that the People’s Bank of China (PBOC) did not increase its gold holdings last month, China’s appetite for gold remains strong, with the central bank having purchased gold for 18 consecutive months previously.
George Milling-Stanley, Chief Gold Strategist at State Street Global Advisors, projected that China’s gold purchases will continue, albeit potentially at a less consistent rate. He also highlighted the persistent influence of Asian demand on the global gold market, driven by population and economic growth in the region.
“Investment demand in that part of the world, the Far East, the Middle East, India, subcontinent, and so on, has always had a major influence on the price, and the more it grows, the more influence it’s going to have,” Milling-Stanley said. “Population growth has been fastest through the emerging markets for the 50 years I’ve looked at gold. Economic growth has been fastest in the emerging markets all the time I’ve been looking at gold. Both of those factors will dictate who takes the most gold.”
Launch of the Retail Gold Investment Committee
In a related development, the SBMA has established the Retail Gold Investment Committee in collaboration with the WGC. Announced during the Asia Pacific Precious Metals Conference, this committee aims to enhance trust and transparency in retail gold investments by implementing the WGC’s Retail Gold Investment Principles (RGIP).
Gregor Gregersen, founder of Silver Bullion and chairman of the committee, explained that the committee will focus on ensuring transaction integrity and regulatory compliance in gold dealings. Additionally, it will address issues such as preventing the misuse of gold and silver investments for money laundering, enhancing metal authentication, and providing a collaborative platform for industry stakeholders.
Albert Cheng, CEO of SBMA, underscored the importance of this initiative: “The establishment of the RGIP Committee Singapore Chapter under SBMA… marks a pivotal step in strengthening the retail gold investment market in Singapore and positioning the country as part of the global gold map.”
Implications for Jewellers and the Industry
The establishment of an Asian gold hub in Singapore signifies a strategic shift that could have extensive implications for the jewellery industry. By positioning Singapore as a central player in the global gold market, jewellers in the region can expect enhanced access to gold supplies and potentially more stable pricing influenced by regional demand factors.
Furthermore, the implementation of the Retail Gold Investment Principles promises increased transparency and trust in gold transactions, which could boost consumer confidence and drive higher investment in gold jewellery. This initiative aligns with broader trends of growing gold investment demand in Asia, suggesting a robust market for jewellers catering to both retail and institutional buyers.
