Singapore will exempt investment-grade gold and other precious metals from a seven per cent goods and services levy to kick-start the region's gold trading position, according to the latest budget announcement. 

Finance Minister Tharman Shanmugaratnam announced in his budget speech on Friday that the decision had been made following strong Asian demand for the yellow metal, which is widely used by investors as an inflation and deflation hedge. 

The move brings Singapore's tax approach to precious metals investment in line with the practices of other countries like Australia and Switzerland, which many consider the capital of gold trading.

"We will facilitate the development of gold trading, which can draw on Singapore's strengths as a financial and trading hub, to meet strong demand for investment-grade gold in Asia," Tharman said. 

As reported previously by this publication, the wealth management industry has seen a number of new firms set up around the world to provide investors access to the gold market, such as in the form of holding and storing physical gold due to some concerns about the robustness of gold "proxies" such as exchange-traded funds in the event of a major economic and market crisis.