[SINGAPORE] Asia is emerging as the new centre of gravity for the global gold market, with resilient regional demand supporting bullion prices as Singapore and Hong Kong strengthen their gold trading infrastructure.

The shift is happening even as prices retreated by around 25 per cent from a record high of US$5,500 an ounce in January; the metal was trading at US$4,078.56 an ounce as at 9.45 pm on Wednesday (Jul 8), down around 5 per cent in the year to date.

As investors sold down to raise liquidity during the Middle East conflict, the price of gold came under pressure, but analysts said demand in Asia has propped up prices.

One proxy for this is physically backed gold exchange traded funds (ETFs). Asia led global inflows into gold-backed ETFs for the first half of the year, based on a World Gold Council (WGC) report published on Wednesday.

The region added a record US$12 billion over the period, and Europe, US$3.2 billion. North America recorded ETF outflows of US$7.7 billion – its weakest first half since H1 2013.

Growing relevance of Asian markets

In recent months, Singapore and Hong Kong have both unveiled measures to deepen their gold infrastructure in trading, vaulting,...