SINGAPORE - The Monetary Authority of Singapore (MAS) said on Tuesday it would launch a vaulting service to hold bullion for foreign central banks and lower taxes on some companies in the gold market as it competes for a bigger slice of the precious metals trade.

"Developing our gold market is an extension of Singapore's role as a trusted financial centre," said Deputy Prime Minister Gan Kim Yong, who is also Singapore's Trade Minister and chairperson of MAS.

The gold vaulting service will hold bullion reserves on behalf of foreign central banks, international financial institutions and sovereign entities in Singapore's national currency vault, which has room for 500 metric tons.

"With growing demand for gold as a reserve asset, central banks are looking for more options to strengthen their resilience," Gan said.

"There's interest that has been expressed to us. Because these were confidential, I won't be able to share details of which particular central banks have approached us," he added.

MAS and the Ministry of Finance will also seek to extend tax relief for gold to wholesale services between institutional participants, such as vaulting, refining, recasting, assaying and broking, from April next year.

"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," MAS said in a statement.

The move comes as Singapore prepares to launch an over-the-counter gold clearing system by the end of the year.

Live trading and market operations are expected to start by March 2027, with gold market liquidity building throughout the year, MAS said in its statement.

Separately, SGX’s physically deliverable gold kilobar futures are targeted for launch in the second quarter of 2027, the statement added.

Elsewhere in Asia, Hong Kong's government has been pushing to expand bullion storage and develop the city as an international gold trading centre.