As KOSPI Remains Stagnant, Investors Turn Their Eyes Again to Gold

Korea Economic Daily

Summary

This month, a net inflow of ₩55 billion has entered domestic gold spot ETFs, indicating heightened interest in gold investments amid stock market volatility.
Domestic gold fund assets under management and spot trading value have also increased significantly so far this month.
In the global market, investment bank UBS has raised its gold price forecast. They attribute this to uncertainty in the US economy and increased gold purchases by central banks worldwide.

This month, gold spot ETFs have seen a net inflow of ₩55 billion

Spot trading volume also up 50% in just one month

As the domestic stock market shows sluggish movement, individual investors are shifting their attention to gold investments. With expanding market volatility and growing expectations for a US interest rate cut, there is a clear preference emerging for gold, the representative safe-haven asset.

According to the Korea Exchange (KRX) on the 20th, during this month (1st–19th), domestic individual investors made a net purchase of ₩55 billion in gold spot ETFs listed on the KRX. ₩28.6 billion flowed into the 'ACE KRX Gold Spot ETF,' and ₩26.3 billion into the 'TIGER KRX Gold Spot ETF.' This surpasses last July’s monthly net purchase amount of ₩49.3 billion.

Gold fund total assets are also rising rapidly. At the end of last month, gold funds totaled ₩1.1602 trillion, and this figure has increased by more than ₩67 billion this month to reach ₩1.2274 trillion.

Spot trading is also active. This month, the average daily trading value of 1kg of gold on the KRX gold market reached ₩49.2 billion, a nearly 50% increase from last month's average of ₩33 billion.

The broadening of gold investment is largely due to sluggish domestic stock markets. As the KOSPI Index remains boxed between 3,100 and 3,200, losing upward momentum, demand for safe-haven assets has grown. The rising expectations for a US rate cut have also fueled investment sentiment in gold. The lower the interest rate and the higher the possibility of inflation, the more attention goes to gold as a hedge.

In the global market, expectations for gold price increases are also growing. Investment bank UBS raised its gold price forecast for March next year from $3,500 per troy ounce (about ₩4.89 million) to $3,600 (about ₩5.03 million). UBS observed, "Uncertainty about the US economy, declining confidence in the dollar, and increased gold purchases by central banks are all driving the gold market strength."

Yang Ji-yoon, yang@hankyung.com