Summary
- Domestic gold prices fell 3.38% in one day, showing signs of easing in the 'Kimchi premium'.
- Analysis suggests that domestic gold prices recorded a larger drop than international rates due to excessive 'Kimchi premium'.
- The price gap between domestic and international gold markets is reportedly narrowing.
Domestic physical gold prices fell more than 3% in just one day. Analysts suggest that the 'Kimchi premium' phenomenon, where prices were nearly 20% higher than international rates, is showing signs of easing.
According to the KRX Gold Market on the 17th, domestic gold spot price closed at 158,000 won per gram, down 3.38%. This marks the largest decline since April last year. The price dropped as much as 7.4% in early trading. The international gold price compiled through Morningstar was 133,950 won per gram in Korean currency, showing a smaller decline of 1.6% compared to the previous trading day.
Analysts point out that the domestic gold spot price, which had been hitting record highs, fell more sharply than international prices due to an excessive Kimchi premium. Gold typically maintains consistent value globally, with rare instances of price disparity. However, recently in Korea, strong FOMO (Fear Of Missing Out) in gold investment has led to a significant shortage of physical gold. The rising won-dollar exchange rate and low arbitrage trading also contributed to the widening Kimchi premium. On the 13th, the price disparity between the London Bullion Market Association (LBMA) and KRX Gold Market reached a record high of 19.47%. Analysts suggest this disparity is now narrowing in accordance with the law of one price (one product, one price).
Reporter Lee Si-eun see@hankyung.com
Korea Economic Daily
hankyung@bloomingbit.ioThe Korea Economic Daily Global is a digital media where latest news on Korean companies, industries, and financial markets.
