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SHANGHAI: The Hang Seng Gold ETF surged more than 9% on its trading debut in Hong Kong on Thursday as spot gold rallied to a record just below $5,600 an ounce, with investors seeking safety amid geopolitical and economic uncertainties.
The Hang Seng Gold Exchange Traded Fund is managed by Hang Seng Investment Management and closely tracks the morning fixing price of gold per troy ounce announced by the LBMA, the international gold trade association based in London.
Gold vaulted above $5,000 for the first time on Monday and is up more than 10% so far this week, supported by safe-haven flows, firm central bank buying and a weaker dollar.
"In the short term, the market looks overheated; over the longer term, this may mark the start of a redefinition of the monetary system," said Zeng Wenkai, chief investment officer at Shengqi Asset Management. "Key events to watch are whether Western central banks sell U.S. Treasuries and buy gold; if they do, gold could climb above $10,000."
The move above $5,500 extends this year's gains, with gold supported by the rotation out of U.S. dollar assets and robust physical demand, particularly in China where onshore prices trade at a premium, said UBS strategist Joni Teves. She said that the current environment is characterized by strong momentum, making it difficult to fight the trend, but caution is warranted against chasing gold at these elevated levels.
Onshore China, the E-Fund Gold ETF jumped more than 5%. E-Fund's Gold Miner Select Index ETF is set to debut on the Hong Kong Stock Exchange on Friday.
Surging gold prices have driven inflows into such funds, and several managers have warned investors about trading price premiums, saying purchases at steep premiums could lead to significant losses.
E-Fund Management said late on Tuesday it will suspend subscriptions and systematic investment plans for the Class A units of its E-Fund Gold Theme Fund starting on January 28, according to a company notice. (Reporting by Shanghai Newsroom; Editing by Christian Schmollinger)
