South Korean Retail Investors Turn Net Buyers of Gold After Four Months

South Korean retail investors turned net buyers of gold for the first time in four months, raising questions about whether the recent rebound in prices can continue.

Retail investors were net buyers of 133 billion won ($96.3 million) on the KRX gold market from the start of August through Aug. 14, according to the Korea Exchange.

They had been net sellers for three straight months since May. Monthly sales totaled 125 billion won ($90.5 million) in May, 348 billion won ($252.1 million) in June and 51 billion won ($37.0 million) in July.

The return to net buying appears to reflect a recent rebound in global gold prices after a period of declines. Weaker US employment data, purchases by central banks and uncertainty over artificial intelligence investment have been cited as drivers of the recovery.

Buying has also picked up in gold-related exchange-traded funds. From the start of August through Aug. 14, retail investors were net buyers of 37 billion won ($26.8 million) of the ACE KRX Gold Spot ETF and 14 billion won ($10.1 million) of the TIGER KRX Gold Spot ETF, Korea Exchange data showed.

"Gold prices will likely continue to fluctuate for the time being depending on the direction of real interest rates and the dollar," Jeong Hyun-jong, an analyst at Korea Investment & Securities, said. If high interest rates persist and real rates rebound, short-term volatility in gold could increase, though the chances of a sharp slump like in the past are limited by structural factors such as central-bank buying, he added.

Gold still has room to rise gradually once the US enters a phase of meaningful declines in real interest rates, driven by an economic slowdown and benchmark rate cuts in the second half of this year and early next year, Jeong said.

Lee Su, Hankyung.com reporter 2su@hankyung.com