Asian Gold Demand Surges as Banks Expand Product Offerings

Asian banks have significantly expanded their gold product and service offerings in recent months. DBS in Singapore now offers fractionalized gold trading on a retail app, allowing investors to purchase tokens backed by as little as 1 gram of gold. Meanwhile, HSBC plans to increase its gold storage capacity in Hong Kong to 200 tonnes.

In addition, the region has seen a surge in gold-backed ETFs. Asian-based ETFs accumulated over 74 tonnes of gold through the first half of the year, setting an H1 record with a value of $12 billion. This growth is being driven by rising demand for gold from central banks, institutional investors, and retail consumers.

KPMG China head of banking and capital markets in Hong Kong, Jia Ning Song, believes that this buildout isn't just a response to the current bull market. 'Nobody constructs vaulting capacity, clearing memberships and tokenization platforms, multiyear, capital-intensive commitments, to monetize a 12-month rally,' he said.

Song noted that nearshoring investments appeal to Asian investors, allowing them to set up local clearing venues and quote and settle gold during Asian trading hours. 'As credit risks become more topical, gold's minimal counterparty risk is proving especially attractive,' he added.