Gold Jumps 9.7% in a Month as Retail Investors Snap Up $95 Million of Gold ETFs

Gold prices are strengthening again as stock-market volatility picks up. Investors are pouring into the metal to hedge against U.S. fiscal strains and a weaker dollar.

According to the financial investment industry on September 8, gold futures on the COMEX in New York climbed 9.66% in August from a month earlier. Excluding January, when expectations for interest-rate cuts were especially strong, it was the biggest monthly gain in decades.

A so-called debasement trade, an investment strategy aimed at hedging against a decline in the dollar's value, is a key driver of the latest rally. With U.S. national debt exceeding $40 trillion, the dollar index has fallen to around 99 recently from 100.957 in early June. As concerns about fiscal soundness grow, demand is increasing for supply-constrained assets such as gold and Bitcoin.

South Korean investors are also expanding their gold exposure. Over the past month, retail investors posted net inflows of about $95 million into domestically listed spot gold exchange-traded funds. Over the same period, funds that invest in gold-mining companies returned more than 20%.

Gold investment options include the KRX Gold Market, spot gold ETFs, and gold futures and futures-based ETFs. In the KRX Gold Market, capital gains and dividend income taxes are not imposed on exchange-traded profits, while spot gold ETFs can be traded through regular stock accounts. Futures products, by contrast, can incur rollover costs when contracts expire.