Hong Kong’s push to become a gold trading hub is beginning to bear fruit, with the city recording a surge in gold exchange-traded fund (ETF) inflows in April as geopolitical tensions fuel investor demand for the yellow metal, according to industry participants.

Physically backed gold ETFs in Hong Kong attracted a record US$732 million last month, according to the World Gold Council. That represented 41 per cent of Asia’s US$1.8 billion inflows and 11 per cent of the global total of US$6.6 billion.

The CSOP Gold ETF, which listed in April on the Hong Kong stock exchange, debuted with assets under management of about US$720 million, making it the city’s largest local physical gold ETF to date.

Five gold ETFs with combined assets of HK$28 billion (US$3.6 billion) were listed as of April, exchange data showed. These products give investors a straightforward way to trade gold, much like buying and selling stocks.

The CSOP Gold ETF directly holds 4.7 tonnes of physical gold stored in Hong Kong, offering investors the option to redeem bullion. The development highlights the need for the city to expand storage capacity to support trading of more gold products.

Hong Kong Chief Executive John Lee Ka-chiu set a three-year goal in his 2025 policy address to help the Airport Authority and financial firms establish facilities for more than 2,000 tonnes of gold. A central gold clearing system is expected to start later this year, while Hong Kong Exchanges and Clearing (HKEX) plans to relaunch gold futures in the coming months as a hedging tool for investors.