Singapore, an Asian hub for banking and finance, is ramping up its bid to become a center for gold trading that may one day rival London.
This week the Southeast Asian city-state unveiled plans to launch a physically deliverable gold contract in September to meet strong demand from Asia – home to the world's biggest gold consumers.
"I think this is the next step for Singapore, which has made a number of moves to turn itself into a gold hub," said Victor Thianpiriya, a commodities analyst at Australian bank ANZ.
"Singapore is already a hub for financial services and wealth, so it makes sense that it wants to make itself a benchmark for gold trading in Asia."
The Singapore Exchange said on Wednesday that the contract will be the world's first wholesale 25 kilobar gold contract and will be made up of a series of six daily contracts.
In 2010, Singapore set up a high-security storage facility called the Singapore Freeport that subleases storage space to management companies.
Two years ago, the government scrapped a sales tax for investment-grade gold and in the past year banks such as Deutsche Bank have set up gold vaults on the tiny island.
"This [gold contract] is a plan two years in the making. The reason is that we have seen a trend of gold moving from West to East and there is actually no market place for market players to buy gold at a wholesale level," Albert Cheng, managing director, Far East at the World Gold Council, told CNBC.