'When gold prices went crazy' I should have at least bought then… again an all-time high

Gold prices have again hit a record high. Geopolitical uncertainty has risen, including the U.S. blockade of Venezuela, increasing demand for safe-haven assets. As a result, funds investing in gold have also seen rapid inflows.

According to the New York Commodity Exchange (COMEX) on the 23rd, the February contract for gold futures for next year broke through $4,400 per troy ounce the previous day to set a new record. It closed at $4,469.4 per troy ounce, up 1.87% from the previous session. Intraday it rose as high as $4,484.5. The strengthening of U.S. oil blockade measures against Venezuela led to a rush of buying into gold as a safe-haven asset.

Gold prices have risen more than 70% so far this year. Analysts say prices were driven up not only by increased global geopolitical tensions but also by central banks around the world, including China, starting to buy gold. The widening U.S. fiscal deficit and the weakening of long-term trust in U.S. Treasuries also contributed to gold's strength.

Yang Hyun-kyung, a researcher at iM Securities, said, "As geopolitical and fiscal risks expand, preference for gold, which has no issuer risk, is increasing," and explained, "This year the global central banks' share of gold holdings expanded to 24%, surpassing the share of U.S. Treasury holdings (23%) for the first time." In securities circles, the prevailing view is that next year's gold price will exceed $5,000 per troy ounce.

As gold prices soar, gold funds have also become popular. According to FnGuide, as of the previous day the assets under management of 13 domestic gold funds exceeded 2.5 trillion won. There was a net inflow of 997.5 billion won over the past three months. Returns during this period also reached 21.29%, matching the performance of leveraged funds (24.09%).

In particular, inflows through exchange-traded funds (ETFs) have been striking. Over the past three months, four of the top five commodity-related ETFs with the largest net purchases by individuals were gold ETFs. 'ACE KRX Gold Spot' ranked first with inflows of 670.9 billion won. Investment demand was also concentrated in 'TIGER KRX Gold Spot' (341.1 billion won), 'KODEX Gold Active' (90.3 billion won), and 'SOL International Gold' (51.2 billion won).

Gold ETF products are also diversifying. On the 16th of this month, Hanwha Asset Management launched 'PLUS Gold & Bond Mixed', which invests half in gold and half in 3-year government bonds. Kiwoom Asset Management also introduced 'KIWOOM US S&P500 & GOLD', which invests a fixed 90% in the U.S. benchmark S&P500 and 10% in gold. Since its launch on the 9th, 10.4 billion won of personal funds have flowed in.

Reporter Yang Ji-yun yang@hankyung.com