A Singapore Gold Reference Price – Are You Ready to Trade?

The launch of a physically-settled spot platform by Abaxx Spot in Singapore, that offers a new vault holding structure allowing the owner of the gold to maintain legal title yet not have to bear the cost of an unallocated account, is a genuinely new legal development for the market. In parallel, the Abaxx Exchange has listed a physically-settled gold kilo bar futures contract that is centrally cleared providing the market with a central limit order book model and the pricing transparency that follows with that. The need for an Asian benchmark gold price has been a long standing one. If market participants are ready to trade, all the ingredients are now in place for a Singapore gold reference price to be established.

At a glance

The need for an Asian benchmark gold price has been a long standing one. If market participants are ready to trade, all of the key ingredients are now in place for a Singapore gold reference price to be established.

The launch of a physically settled spot platform by Abaxx Spot in Singapore, that offers a new vault holding structure allowing the owner of the gold to maintain legal title, yet without having to bear the cost of an allocated account, is a genuinely new legal development for the market. In parallel, the Abaxx Exchange has listed a physically settled gold kilobar futures contract that is centrally cleared, providing the market with a central limit order book model and the pricing transparency that follows.

Introduction

The poet George Hebert is quoted as having said, “Gold is the universal language understood by all nations.”  In a world where deglobalisation trends are placing stresses on the current trade order, prudent risk management and investor sentiment prompts the search for safe haven investments. This is as true of central banks as it is of the private investor. Whilst gold market champions will claim that gold is not just the ‘go-to’ asset class when equities or bond markets are wobbling, the reality is that this is when investment into precious metals, especially gold, is most striking. The most recent rally of gold prices from US$ 2,646 on 2 January 2025 to US$ 3,370 on 2 June 2025,¹ is a case in point.

Whilst there are plenty of economic, political or commercial drivers for this shift of capital into gold, if one focuses on the drivers of demand, price dynamics and physical features of investing in precious metals, the question emerges around whether the existing trading model for precious metals, built around a globalised economy, remains fit for purpose in an environment where localisation is the direction of travel?

 Historically, the London and New York markets have been the centres for determining the price of gold, with London being the driver of spot prices, and New York the leader for hedging. Yet it is Asia that provides the greatest use case for physical gold. Indeed, last year the Times of India reported² that Indian households collectively hold 11% of all of the gold that exists in the world today.  This is more than the gold reserves of the top five gold-holding countries combined. However, Asia does not currently have a gold reference price to rival London or New York. In this paper, we consider whether that is about to change.

LBMA and Comex

The London Bullion Market Association (LBMA) is an independent not for profit member-based precious metals association that maintains the Good Delivery List which is a threshold gateway to the Loco London market. The LBMA, together with the London Platinum and Palladium Market (LPPM), benefit from the historic role played by London as the world’s trading hub for precious metals.

On the other hand, the Commodity Exchange (COMEX), owned by the CME group and based in New York, is the key source of price discovery through its various listed futures contracts in gold and silver traded via CME Globex, the CME’s electronic trading platform.

Both LBMA and COMEX maintain their own criteria in order for gold and silver to meet their respective ‘Good Delivery’ requirements. Each maintain their own list of approved assayers, recognised or approved refiners and different qualifying bar size requirements. Some of the features of each are summarised in the table below.

The key practical distinctions, therefore, between the LBMA traded gold contracts and the COMEX contracts, boil down to the size of the bars for meeting Good Delivery requirements, and the structural differences resulting from a cleared OTC model versus cleared futures markets.

These structural differences between cleared OTC and cleared futures markets are not insignificant. For example, the LBMA clearing model, using the London Precious Metals Clearing Limited (LPMCL), leads to bilateral counterparty risk arising between the four main clearing banks⁵ forming the LPMCL; and the customer margin requirements are based on the relationship between the customer and its clearing bank. In contrast, COMEX has a traditional central counterparty model (CCP) that follows regulatory capital requirements as well as mandated margining requirements. This, in turn, means that there is greater transparency around the COMEX clearing structure than there is in the LPMCL clearing structure.

In both trading structures, to gain access to gold markets, the customer has to give up legal title to the gold to its clearing bank, although in COMEX the customer might retain beneficial title to the gold depending on the structure of the transaction. In short, to trade gold on either market, the customer takes credit risk against its clearing bank but because of the regulated environment applied to CCPs, there is greater credit protection in the COMEX structure.

An Asian or Singapore gold price

With Abaxx Spot’s announcement launching a physically settled gold spot platform and for the Abaxx Exchange to list a gold futures contract, cleared through Abaxx Clearing, there is now an effort to establish a ‘loco Singapore’ gold price for both spot and futures deliveries. Unlike the current model where spot prices for gold are set in London but futures benchmark prices are set in New York, the co-location of both a venue for spot delivery and the ability to hedge forward gold prices in Asia does offer something new to the market.

As described by their press release:

“Abaxx is … to launch Abaxx Spot, a new physically-allocated (through the undivided interest structure) gold trading platform in Singapore. The platform is designed to align spot and futures gold markets in the same location, facilitate secure physical trading and efficient OTC transfer of kilobars, and aims to enhance market access and transparency through direct participation in a pre-funded central limit order book (CLOB).“

and

“Abaxx’s Gold Singapore Futures contract is a US dollar-denominated, kilobar-sized, physically-deliverable product, with delivery into approved vaults in Singapore.“⁶

The efforts to create an Asian gold price are not new. There is a relatively deep domestic gold market in China, operated by the Shanghai Gold Exchange (SGE), which is regulated by the People’s Bank of China. Since 2014, the SGE has operated a renminbi-denominated offshore gold market through a wholly owned subsidiary, the Shanghai International Gold Exchange (SGEI). The SGEI is accessible to international board (mostly non-PRC) participants.⁷ The SGEI business uses separate vaults from those used for the domestic business of SGE. The first SGEI vault was located in the Shanghai Free Trade Zone and a second one was approved in Shenzhen in 2019. In May 2025, the SGE announced that it will authorise a vault for the SGEI business in Hong Kong, thereby allowing storage of SGEI-qualifying precious metals outside the mainland for the first time. Many will be aware that Hong Kong’s ‘Special Administrative Status’ allows for fewer capital restrictions to apply compared to mainland China. The objective of this extension of the SGEI into Hong Kong is to link Chinese physical gold trading with offshore yuan markets to help internationalise gold pricing away from US dollars.

However, gold futures trading doesn’t take place on the SGEI or the SGE. Domestic gold futures are traded on the Shanghai Futures Exchange, which is regulated by a different regulator, the China Securities Regulatory Commission.

Abaxx is not the first organisation to attempt to establish a Singapore gold reference price. There were attempts in the early 1980s to list a 100 ounce cash-settled gold futures contracts on the Gold Exchange of Singapore, that were cleared on the Singapore Gold Clearing House, and which included all of the main Singapore banks as clearing members.

As recently as 2015, ICE Futures Singapore launched a physically delivered One-Kilo Gold Futures contract, which was made dormant in 2019 following a lack of liquidity. 

The question that follows is whether this latest effort by Abaxx will be more successful than prior efforts to establish an Asian benchmark for gold? We explore some of the relevant factors below.

The size of the traded bar

Although the London market has a kilobar gold product, that bar does not formally qualify as a Good Delivery Bar for ‘Loco London’ or ‘Loco Zurich’. Therefore, the spot reference price and the 400-ounce London market bar attracts larger institutional market participants, rather than smaller investors. By contrast, the smaller COMEX 100-ounce bar allows for a lower entry point through which to access the US gold markets. However, when the price of a fine ounce of gold exceeds the present US$3,000 mark, a single COMEX bar will cost more than US$100,000.

This high financial bar to entry takes investment in gold outside the reach of all but the institutional investor or the high-net-worth individual investor. In the context of Asian requirements, as a benchmark, the new Abaxx futures contract requires physical delivery of a kilobar of gold, which is a third the size of a COMEX deliverable gold futures contract, and a twelfth of the size of the Loco London OTC forward product.  Given the character and pool of investors in Asia, a kilobar is the right size for an Asian benchmark and for encouraging liquidity. It is notable that, other than ICE Future Singapore’s attempt in 2015, all prior attempts to list a gold contract in Singapore have targeted a bar larger than a kilobar.

Market dislocation

The fact that gold prices are set on the basis of the London spot price, but liquidity for hedging is in New York on COMEX, means that Asian physical gold purchasers are exposed to the price risks of two markets. This in turn means that, in the absence of their own benchmark, Asian customers face the consequences of market dislocation that occurs between the spot rate in London and COMEX futures prices.

This dislocation cost is not just the difference between the carry cost of spot versus futures prices, it goes beyond – to the economic and financial inefficiencies that can arise in stressed or disrupted markets. Whereas such dislocations have been rare, their frequency appears to be increasing, most recently during the COVID-19 pandemic and the Liberation Day trade announcements. The inefficiencies can arise in many ways, such as in increased transportation and refining costs between London and New York and in premiums charged for futures relative to the spot prices reflecting lease rate costs or other storage costs.

A precious metals trading market that, despite its inefficiencies, has historically lived with the absence of co-location, could have taken some comfort in the globalised nature of trade, especially between Europe and the US. However, as localisation becomes the likely direction of travel, there is every reason to believe that instances of market dislocation could increase.

Aside from the benefit of minimising market dislocation risk provided by an Asian benchmark, the respective Abaxx spot and futures offering allows for co-location of both the supply and hedging opportunities. The proposals by the Shanghai Gold Exchange to further internationalise access to their markets via the use of Hong Kong vaults, are aimed at promoting the renminbi as an alternative reference currency for gold. Although the Abaxx contracts are priced in US dollars and there is talk of de-dollarisation into other currencies, such as renminbi, that may be a step too far for most investors – at least, for now.

Title vs credit

Although co-location and bar size helps, that alone might not be enough of a ‘pull factor’ to overcome the natural inertia built into today’s precious metals markets. As demonstrated by prior attempts to establish a Singapore gold price, altering the status quo in the market requires more than just an opportunity to create a local price. To add to the list of differentials to LBMA and COMEX markets, Abaxx Spot offers the ability for investors to retain legal title to the gold that they purchase on the platform, by offering an undivided interest structure for holding gold. This allows investors the comfort of knowing that the gold they acquire belongs to them and yet is held securely in the vault structure maintained by Abaxx Spot.

Market participants will be familiar with the use of allocated and unallocated holding structures for gold. As in the case of base metals, the legal nature of the accounts held in vaults operates much the same as the legal nature of accounts held in a base metals warehouse. Both allocated and unallocated precious metals accounts operate on the basis of a bailment relationship between the vault operator and the depositor of the gold to the vault. In the case of both the LPMCL and COMEX cleared models, the vault’s relationship is typically with the clearing member. For regulatory capital reasons driven by the Basel III requirements⁸, clearing banks have to charge their customers more where the gold is held in the customer’s own account (i.e. allocated account) rather than the bank’s customer (comingled) account (i.e. unallocated account). In transferring gold into an unallocated account, the customer gives up legal title to the gold leaving the clearing bank free to utilise the gold, for example in support of gold leasing, repos or lending activities. Therefore, the customer takes credit risk against the clearing banks in such circumstances. As a result, only the most creditworthy of banks act as LPMCL clearing banks.

Abaxx Spot offers a third structure using the concept of an undivided interest in a bulk, or in this case a pool of gold. Both common law and statute recognise the ability for an ownership interest to arise in the context of a sale of goods held in the form of a bulk, and for a sale of that undivided interest to occur in respect of such goods. By establishing a third account category, where the gold is held with Abaxx Spot in the form of a gold pool but legal title is retained by the owner of the gold, Abaxx’s undivided interest structure allows customers to have the same legal security as an allocated account, but with the cost and operational efficiencies of an unallocated account. Such a holding structure will have both cost efficiencies for the owner of the gold as well as reducing the owner’s credit risk to the bank or third party normally providing the storage services using unallocated accounts.

GST treatment and market infrastructure

In support of developing a precious metals market in Singapore, transactions involving certain qualifying categories of precious metals have been exempted from goods and services taxes (GST) since 2012. Termed ‘Investment Precious Metals (IPM)’, the sale of IPM products does not attract GST in Singapore.⁹ The qualifying gold for delivery into both Abaxx Spot and the Abaxx Futures contracts are IPM products. The application of the GST carve-out to IPM products is because the Government of Singapore recognises that IPM products are primarily treated as financial assets by investors.

Besides GST relief, Singapore has all the infrastructure needed to support an Asian benchmark price. It has a LBMA Good Delivery refiner (Metalor Technologies Singapore Pte Ltd.) and top-tier logistics and warehouse facilities, such as freeport vaults which operate as bonded warehouses (e.g. Singapore Precious Metal Exchange’s Le Freeport vault, Brinks Global Services or Loomis International).  

Singapore also benefits from a low tax, secure investment environment without rigid capital controls, where the rule of law prevails and mechanisms for dispute resolution are robust and effective.

The table below provides a comparison between the gold product specifications for delivery between London, New York and Singapore.

Conclusion

The introduction of a dual spot and futures gold kilobar offering by Abaxx provides the ingredients that complement the physical business infrastructure in Singapore that has been developing progressively since the 2010s. There is little doubt that the same platform and approach used by Abaxx for gold can be replicated and applied to other precious metal products such as silver, platinum and palladium.

Whether the world adjusts to a less globalised trading model or shifts to a regionalised/localised model for trading precious metals, there is a very real, present and timely opportunity to build out a benchmark Singapore gold price. All the ingredients are now in place for Singapore to become Asia’s precious metal hub.

Disclaimer: Holman Fenwick Willan Singapore LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.

Footnotes

1. Gold Price Performance & Data | World Gold Council
2. World Gold: Indian women hold 11% of the world’s gold; read complete report! | – Times of India
3. ‘Loco London’ is a reference to a central electronic clearing system operated London Precious Metals Clearing Limited (LPMCL), operated by a group of LBMA member banks. Settlement occurs through book entry rather than physical delivery of gold.
4. COMEX adopts a warrant structure for settlement of gold futures contracts (similar to the LMESword warrant settlement system).
5. These four clearing banks also own the main vaults in London or Zurich.
6. Abaxx to Launch Singapore Gold Kilobar Futures and Physically-Allocated Gold Pool on June 12, 2025
7. Please note that a major limitation of the SGEI model is that no International Member or its customer may participate in physical delivery of platinum and silver. In short, the international product is currently limited to gold only.
8. Basel III is an international regulatory framework developed by the Basel Committee on Banking Supervision to strengthen bank capital requirements, improve risk management, and enhance liquidity standards, aiming to increase the resilience of the global banking system in response to the 2007–2009 financial crisis.
9. IRAS e-Tax Guide GST: Guide on Exemption of Investment Precious Metals (IPM) (Nineteenth Edition).
10. ‘Loco London’ is a reference to a central electronic clearing system operated London Precious Metals Clearing Limited (LPMCL), operated by a group of LBMA member banks. Settlement occurs through book entry rather than physical delivery of gold.