What Is the Price of Gold in Singapore？

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Singapore’s gold market has a rich history. In the past, gold trading and its import – export were strictly regulated by the government. However, in April 1969, the Singaporean government took a significant step by issuing business licenses to seven commercial banks and one trading company, allowing them to conduct gold transactions. But initially, these transactions were only permitted with industrial users, goldsmiths, and other non – individual customers. The main gold trading product at that time was the one – kilogram gold bar, and a one – dollar import tax was levied on each ounce of gold certificates. Due to these restrictions, the market trading volume was relatively small.

In August 1973, a major change occurred. The authorities completely lifted the restrictions on gold trading, enabling both local and foreign individuals in Singapore to freely buy, sell, and store gold. The removal of the gold import tax was a crucial factor that accelerated the development of the Singaporean gold market.

In May 1978, following international norms, the Singaporean government further relaxed foreign exchange controls, allowing for the free movement of gold in and out of the country. This created excellent conditions for international gold futures trading. In October 1978, the Singapore Gold Exchange was officially established, marking the beginning of the trading of gold spot and futures. It became the first international gold futures market in Southeast Asia.

Over time, the Singaporean gold market has strengthened its connections with major gold markets around the world, such as the London Gold Market, the Hong Kong Gold Market, and the New York Mercantile Exchange. These connections have significantly promoted the development and internationalization of the Singaporean gold market. In 1983, the Singaporean government reorganized the gold exchange, expanding its trading scope to include financial futures services, which further integrated it with other international exchanges.

In 1983, the exchange was transformed into a public joint – stock company, renamed the Singapore Gold Exchange Limited, to accommodate more members. The registered capital of the exchange increased from SGD 500,000 to SGD 2 million in 1983. The exchange is managed by a council, which is responsible for planning, decision – making, and implementing the administrative plans and daily operations of the exchange. The council consists of six directors elected by the annual general meeting of members, with a one – year term of office, and the positions of the chairman and vice – chairman of the council cannot be re – elected.

Regular Members: The shareholders of the exchange are its regular members. In the early days of the exchange, members were divided into trading members and brokerage members, with a total of 10 members. In April 1981, the exchange abolished this classification according to the new charter. All regular members are entitled to trade with their own funds within an appropriate amount. They can also appoint floor traders to conduct transactions within the exchange, retain an appropriate amount of long and short positions, and collect trading commissions and other fees. Each regular member must subscribe to 20,000 shares of the exchange with a face value of SGD 1, submit a bank guarantee of SGD 250,000, and pay an annual membership fee. If the member is a company, it must have a paid – up capital of at least SGD 1 million.

Associate Members: The Singapore Gold Exchange has the right to admit associate members, also known as affiliate members. Since these associate members are not shareholders, they have no right to participate in the general meeting of members, cannot own shares of the exchange, and have no voting rights. Associate members are divided into local and overseas associate members. They are required to pay an annual fee and have a paid – up capital of at least SGD 1 million. Associate members can only conduct transactions in the exchange through regular members but can enjoy a 50% discount on commissions. It should be noted that overseas associate members are not allowed to directly trade with Singaporean residents. However, since December 1981, measures have been taken to encourage associate members to trade. Under the condition of prior contact with regular members, local associate members are allowed to send personnel to conduct transactions within the exchange.

The Singapore Gold Exchange trades both gold spot and six types of futures contracts. When the exchange was first established, the 100 – ounce gold bar was the only basic trading unit. On June 16, 1980, kilogram – based gold bars were added as a trading product. The futures contracts are for delivery in 1, 2, 4, 6, 8, and 10 months. The currency unit for price, settlement, and commissions in trading is the US dollar. The gold price is quoted based on the US dollar price per ounce of 100% pure gold, with the minimum quotation unit per ounce being 10 cents, and the maximum quotation not exceeding USD 10 above the previous settlement price. Each month, gold futures have their own transaction prices, and the price fluctuation range is limited by a daily price limit of plus or minus USD 24. When the price limit is reached, trading stops for 1 hour and then resumes. Spot gold and futures that have entered the delivery month are not subject to the price limit.

Mining Production: The global supply of gold from mining has an impact on Singapore’s gold price. Singapore itself does not have significant gold mining operations. However, if major gold – producing countries like China, Australia, or South Africa experience a decline in production due to factors such as labor strikes, resource depletion, or regulatory changes, the overall supply of gold in the global market will decrease. This reduction in supply can lead to an increase in the gold price in Singapore.

Central Bank Reserves: Central banks around the world, including Singapore’s Monetary Authority of Singapore (MAS), hold gold as part of their reserves. When central banks buy or sell gold, it affects the global supply. In 2021, Singapore increased its gold reserves by about 20%, which was the first such increase since 2000. This significant purchase by the MAS reduced the amount of gold available in the open market, potentially putting upward pressure on the gold price in Singapore.

Investment Demand: Gold is a popular investment asset, especially during times of economic instability or inflation. In Singapore, investors, both individual and institutional, often turn to gold as a hedge against economic risks. For example, during the global financial crisis in 2008, many Singaporean investors increased their gold holdings, driving up the demand and price of gold. Exchange – traded funds (ETFs) that track the price of gold are also popular in Singapore. When more investors pour money into these ETFs, it increases the overall demand for gold.

Jewelry Demand: Singapore has a vibrant jewelry industry, and gold jewelry is highly popular. The demand for gold jewelry is influenced by cultural factors, festivals, and fashion trends. For instance, during Chinese New Year and Hari Raya, which are important festivals in Singapore, the demand for gold jewelry typically surges. Local jewelers need to purchase more gold to meet this increased demand, which can drive up the price of gold in the Singaporean market.

Industrial Demand: Gold has unique properties that make it valuable in various industries. In Singapore, the electronics and aerospace industries, which are significant sectors of the economy, use gold in their manufacturing processes. As the demand for high – tech products and aerospace components grows, the industrial demand for gold in Singapore also increases, affecting the overall demand and price of gold.

Interest Rates: Interest rates play a crucial role in determining the gold price. In Singapore, when interest rates are low, the opportunity cost of holding gold (which does not generate interest like bank deposits or bonds) decreases. This makes gold more attractive as an investment, leading to increased demand and a higher price. Conversely, when interest rates rise, investors may shift their funds from gold to interest – bearing assets, causing the gold price to decline. The Monetary Authority of Singapore’s monetary policy decisions regarding interest rates can have a direct impact on the local gold market.

Inflation: Inflation erodes the value of currency over time. Gold is often seen as a hedge against inflation. In Singapore, if the inflation rate rises, the purchasing power of the Singapore dollar decreases. As a result, investors may turn to gold to protect their wealth, increasing the demand and price of gold. For example, if the cost of living in Singapore increases significantly, consumers and investors may start looking for alternative stores of value, and gold becomes an appealing option.

Geopolitical Tensions: Geopolitical events, such as wars, political instability, and trade disputes, can have a significant impact on the gold price in Singapore. Uncertainty and fear associated with these events make investors seek safe – haven assets, and gold is one of the top choices. For instance, during the US – China trade war, the price of gold in Singapore increased as investors worried about the potential negative impact on the global economy. Similarly, if there are political unrest in neighboring countries or international conflicts that affect Singapore’s economic stability, the gold price in Singapore is likely to be affected.

The price of gold in Singapore is usually quoted in Singapore dollars per gram or per ounce. To calculate the price of gold, one needs to consider the international spot price of gold, which is typically quoted in US dollars per ounce, and then convert it into Singapore dollars using the current exchange rate. Additionally, factors such as premiums, which are added to cover the cost of fabrication, distribution, and dealer profit, also need to be taken into account.

For example, if the international spot price of gold is USD 1800 per ounce, and the exchange rate between the US dollar and the Singapore dollar is SGD 1.35 per USD, then the price of gold in Singapore dollars per ounce would be 1800 x 1.35 = SGD 2430 per ounce. If we want to convert this to price per gram, since 1 ounce is approximately 28.35 grams, the price per gram would be 2430 / 28.35 ≈ SGD 85.71 per gram. However, this is a basic calculation. In reality, when purchasing gold in Singapore, there will be additional premiums. A typical premium for a gold bar in Singapore might be around 3% – 5% of the spot price. So, if the premium is 4%, for a 1 – ounce gold bar, the premium amount would be 2430 x 0.04 = SGD 97.2. The total price of the 1 – ounce gold bar including the premium would be 2430 + 97.2 = SGD 2527.2.

The gold price in Singapore is highly volatile. It can change rapidly in response to various factors. In 2015, the Singaporean gold price experienced a significant drop. On July 21 of that year, the price in the spot market plummeted 5.5% in a short period due to a combination of factors, including hedge funds’ stop – loss selling and lack of investor interest. Analysts at that time were bearish on the gold price, predicting that it could fall to USD 1050 per ounce by the end of the year due to the possibility of the US Federal Reserve raising interest rates.

In recent years, with the global economic recovery being less than expected, geopolitical risks remaining, and high inflation in the US and Europe, the gold price in Singapore has shown significant fluctuations. In 2023, Singapore was one of the major buyers of gold among central banks. The continuous purchase of gold by the MAS and other central banks has contributed to the price volatility. When central banks buy large amounts of gold, it reduces the supply in the open market, which can drive up the price. However, if there are sudden changes in economic data or geopolitical situations, the gold price can also experience sharp declines.

The gold price in Singapore is determined by a complex interplay of factors, which together create a dynamic and ever-changing landscape for this precious metal.

Firstly, Singapore’s unique market structure plays a significant role. With its well-established financial infrastructure, numerous bullion dealers, and a regulatory environment that promotes transparency and fair trading, the local gold market operates efficiently. This allows for quick price adjustments based on various influences.

Global gold market trends also have a major impact. As Singapore is integrated into the international financial system, movements in the global gold price, whether driven by large-scale investment shifts in major economies or changes in overall market sentiment towards precious metals, are promptly reflected in the local prices. For instance, when there is a widespread trend of investors worldwide seeking safe-haven assets during times of economic turmoil, the gold price in Singapore tends to rise in tandem.

Supply and demand dynamics are crucial elements as well. On the supply side, factors like gold imports, local refining capacities, and even the recycling of gold within the country affect availability. On the demand front, jewelers’ requirements for crafting beautiful pieces, especially during peak seasons like festive periods or wedding seasons, along with investors’ appetite for adding gold to their portfolios, jointly influence the price.

Economic and geopolitical factors cannot be overlooked. Economic indicators such as inflation rates, interest rates, and the strength of the Singapore dollar all interact with the gold price. Geopolitical tensions, whether in major gold-producing regions or on a broader global scale, create uncertainties that prompt market participants in Singapore to turn to gold, thereby affecting its price.

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