SINGAPORE, Feb 25 (Reuters) - Singapore's Oversea-Chinese Banking Corp OCBC.SI is exploring setting up a custody business for physical gold geared toward institutional and high-net-worth clients, as demand for its app-based trading product accelerates, senior executives said on Wednesday.

The potential move by the second-largest bank in Singapore comes as gold prices have hit fresh highs, drawing interest from investors seeking a haven with exposure to the precious metal.

Kenneth Lai, OCBC's head of global markets, said the bank is taking a two-fold approach to its gold strategy, spanning "custody on-chain and out-of-chain".

He said the bank is exploring physical, allocated gold custody for institutions that typically require reputable third-party custodians.

"On-chain" typically refers to digital, blockchain-linked custody arrangements, while "out-of-chain" refers to conventional custody and delivery processes involving physical bullion.

OCBC does not currently offer physical gold to retail customers, executives said.

Lai was speaking in a briefing after the bank released its fourth-quarter earnings, which beat expectations.

Spot gold XAU= was trading at around $5,188 an ounce on Tuesday.

OCBC's current retail-focused offering is "unallocated" gold, which is often described as "paper gold," allowing customers to trade without taking delivery, according to Lai.

Lai added the bank offers trading access around the clock, including providing prices on weekends after New York market hours.

Sunny Quek, OCBC's head of global consumer financial services, said gold trading has been available on the bank's app since 2021 and demand has sharply accelerated since last year.

"In 2025, we grew eight times ... and for the first two months of this year, we're almost at last year's level already," Quek said.

(Reporting by Siyi Liu, Yantoultra Ngui and Rae Wee; Editing by Thomas Derpinghaus)

((Yantoultra.Ngui@thomsonreuters.com;))