Major Adjustment by Singapore MAS: Gold Reserve Ratio Raised to 5%

On July 28, 2026, the Monetary Authority of Singapore (MAS) issued a monetary policy statement, announcing an increase in the gold reserve ratio from 3.5% to 5% of total foreign exchange reserves. This is the first adjustment to Singapore's gold reserve target since 2020, aimed at addressing persistently high global inflation and escalating geopolitical risks.

According to the official MAS statement, this adjustment will involve the purchase of approximately 120 tonnes of gold, to be executed in batches through international OTC trading and Singapore Exchange (SGX) gold futures contracts. The plan is expected to be completed within 12 months, funded by selling some low-yield US and European government bonds.

Policy Background: Global Central Bank "De-dollarization" and Rising Safe-Haven Demand

In recent years, many central banks have continued to increase their gold reserves. The latest data from the World Gold Council shows that net global central bank gold purchases reached 520 tonnes in the first half of 2026, a record for the period. As a major Asian financial center, Singapore's gold reserve ratio has long been below that of other central banks in the region (such as China and India). This increase is seen as a response to the fragmentation trend in the global monetary system.

MAS emphasized in its statement: "As a reserve asset with zero credit risk, gold can provide liquidity assurance under extreme market conditions. With increased volatility in emerging market currencies, increasing gold holdings helps safeguard the credit foundation of the Singapore dollar."

Market Reaction: SGX Precious Metals Trading Volume Surges, Premiums Rise

Following the announcement, the Singapore gold market reacted sharply. As of midday, the Singapore gold bar premium surged from the usual $1.5/oz to $4.2/oz, the highest since 2024. Major local gold dealers such as BullionStar and Silver Bullion reported a more than 300% surge in customer inquiries.

The SGX gold futures main contract (SGXAU) rose 1.8% to $2,480 per ounce, with trading volume quadrupling from the previous day. Silver futures also strengthened, up 2.1%. Market analysts noted that MAS's purchase commitment will directly provide long-term buying support for the Singapore gold market, attracting more Asian institutional investors.

Impact on the Domestic Precious Metals Industry

Lee Jianhui, Chairman of the Singapore Precious Metals Association (SBMA), commented: "MAS's decision is a strong endorsement of Singapore's position as a gold hub in Asia. Local refineries, storage and logistics companies will benefit from increased physical gold flow demand." He expects gold inventory at Singapore Changi Airport's free trade zone to grow by over 30% in the next 12 months.

At the retail level, some jewelry and gold ornament retailers have begun adjusting prices. Local well-known brand "An Chang Jewelry" announced a 5% increase in workmanship fees for pure gold ornaments to reflect rising raw material costs. On the consumer side, some investors took advantage of the premium increase to sell physical gold bars, while long-term holders remained on the sidelines.

Expert Interpretation: Long-term Positive for Singapore Gold Market

Chen Guohui, Economics Professor at the National University of Singapore, believes that the signaling effect of MAS's move outweighs its actual scale. Singapore's existing foreign exchange reserves are about $400 billion; 5% corresponds to $20 billion, or about 400 tonnes of gold. After purchasing an additional 120 tonnes, total reserves will reach about 520 tonnes. Although still less than that of major countries like China and Germany, it is enough to raise Singapore's per capita gold reserves from the current 0.07 ounces to 0.1 ounces, placing it in the upper-middle range among developed countries.

"More importantly, this marks an official repositioning of gold's monetary attributes," Chen added. "It may prompt other ASEAN central banks to follow suit, forming a regional gold reserve race."

Follow-up Watch: SGX May Launch New Gold Products

According to sources, MAS has asked SGX to explore launching ETF products based on gold reserves and forward foreign exchange hedging tools to facilitate participation by domestic and foreign investors. If realized, Singapore is expected to become the third financial center after London and New York to have a complete gold "spot-futures-ETF-reserve" ecosystem.

As of press time, the SGD/USD exchange rate stood at 1.3120, appreciating slightly by 0.2%, indicating increased market confidence in MAS's policy. Precious metals analysts generally believe that in the short term, local gold prices will continue to be dominated by global safe-haven sentiment, but long-term allocation value has been officially endorsed.