Singapore has rolled out a gold storage service designed for foreign central banks and official institutions, aiming to capture rising global appetite for diversifying where bullion reserves are held.

The gold will be kept in the city-state's national currency vault, which can hold up to 500 tons, with the ability to expand capacity as demand increases, the Monetary Authority of Singapore said in a Tuesday statement.

"Singapore does not aim to replace other gold centers and gold vaulting services," MAS Chairman Gan Kim Yong, who also serves as the country's deputy prime minister, told reporters. "With the growing demand for gold as a reserve asset, I think central banks are also looking for alternatives, looking for more options to strengthen their resilience in terms of their gold reserves," he said.

MAS will additionally provide gold custody accounts to a select group of Singapore-based bullion banks that have expertise in delivering such services, the central bank said in the statement.

Singapore's latest move comes as demand for gold surges among both institutional investors and central banks, which have stockpiled the metal at a swift pace in recent years as geopolitical tensions and worries about government debt enhance its appeal as a safe haven and a means to diversify investment portfolios.