• China and Hong Kong registered inflows in Gold ETFs during April, with the latter seeing record-high numbers.
• Chinese demand for Gold ETFs remains strong, driven by institutional purchases and lower yields.
• Increasing ETF demand tends to support spot prices, which have been hovering between $4,400 and $4,900 since late March.

China continued to lead Asia’s push into Gold buying via Exchange-Traded Funds (ETFs) in April, with Hong Kong registering its highest inflows ever, as Gold prices stabilized after a major pullback in March.

China’s Gold ETFs registered inflows of $498 million in April, according to data from the World Gold Council (WGC). Asia’s largest economy contributed significantly to the rebound in global Gold ETF inflows, particularly when adding Hong Kong’s $732 million record high. 

The surge in ETF inflows in Hong Kong was due to the debut of the CSOP Gold ETF, with about $720 million in assets under management, making it Hong Kong’s largest local physical-gold ETF.

Besides the one-off from Hong Kong, “Gold ETFs in Mainland China continued to draw inflows amid elevated geopolitical tensions, falling yields, and continued official-sector gold buying announcement,” the World Gold Council said. 

Looking at the broader region, Gold ETFs in Asia extended their inflow streak to eight months, adding $1.8 billion in April, with positive contributions also from India. Globally, Gold ETFs recorded inflows of $6.6 billion in the month, partly reversing March’s outflows, with the largest inflows coming from the United Kingdom (UK) with $2.1 billion.

Positive flows via ETFs are a bellwether for spot prices as investor demand via ETFs tends to directly impact the physical market.

Gold prices have traded broadly rangebound since the end of March, within a band of between $4,400 and $4,900. While geopolitics keeps the precious’ metal safe-haven appeal intact, the quick hawkish repricing of global central banks’ rate outlook is also capping gains. 

April’s ETF rebound shows that Gold has somewhat regained its safe-haven appeal. While investor demand through ETFs could keep providing a solid floor for the precious metal, any significant gains would need a decline in energy prices and messages from central banks that the current plans to keep interest rates at high levels are no longer on the table. 

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