SHANGHAI: The Hang Seng Gold ETF soared more than 9% in its trading debut in Hong Kong on Thursday as investors sought safety amid geopolitical and economic uncertainty and physical gold recovered to a record just below $5,600 an ounce.
The Hang Seng Gold Exchange Traded Fund is managed by Hang Seng Investment Management and closely tracks the morning fixed price of gold per troy ounce published by the LBMA, the London-based International Gold Trade Association.
Gold surpassed $5,000 for the first time on Monday and is up more than 10% so far this week, supported by safe-haven capital flows, strong central bank buying and a weaker dollar.
“In the short term, the market seems overheated, but in the long term, this could be the beginning of a redefinition of the financial system,” said Zeng Wenkai, chief investment officer at Shengqi Asset Management. “The key event to watch is whether Western central banks sell US Treasuries and buy gold. If they do, gold could rise above $10,000.”
UBS strategist Joni Taves said a rally above $5,500 would extend this year’s gains, with gold supported by rotation in US dollar assets and solid physical demand, especially in China, where land prices are trading at a premium. He said the current environment is characterized by strong momentum and it is difficult to resist this trend, but caution is needed in chasing gold at such high levels.
Within China, the E-Fund Gold ETF rose more than 5%. E-Fund’s Gold Miner Select Index ETF is scheduled to be listed on the Hong Kong Stock Exchange on Friday.
Rising gold prices have led to an influx of money into these funds, and several managers have warned investors about trading price premiums, saying purchases at high premiums could lead to significant losses.
E-Fund Management announced late Tuesday that it will suspend subscriptions and planned investment plans for Class A units in the E-Fund Gold Theme Fund starting Jan. 28, according to a company notice. (Reporting by Shanghai Newsroom; Editing by Christian Schmollinger)
