COVID-19 pandemic lifts gold market in Korea

Gold has been shining here as lingering uncertainties caused by the COVID-19 pandemic crisis are forcing more risk-averse investors to scramble for the precious metal.

The traditional safe haven asset’s price has risen by more than 20 percent during the past six months. According to the Korea Exchange (KRX) Sunday, the price of one gram of gold stood at 68,640 won ($57.22) as of June 30, up 22 percent from the end of last year and 62.2 percent from the end of 2014.

Globally, gold futures reached their near-eight-year high of $1,788.96 per ounce (31.1 grams) last week — the highest level since October 2012 — due to various events stimulating volatility in the stock market, such as the unending coronavirus effect, upcoming U.S. presidential election, global trade recession and massive monetary easing.

Although the price dropped a bit to $1,779.90 per ounce later last week, Goldman Sachs had earlier predicted the metal’s price to hit $2,000 per ounce within the next 12 months, given low real interest rates and possible currency debasement.

Local market experts agree that the precious metal’s price will continue to grow over a rapid expansion of liquidity from major countries’ aggressive monetary easing, which would in turn inflate the price of real assets.

“A possible devaluation of currencies due to inflation could be one factor that could lead a further price hike of gold. Gold’s price during the latter half of this year could exceed the $1,900-per-ounce mark,” said analyst Min Byung-kyu from Yuanta Securities Korea.

Another market watcher stressed that gold is expected to continue serving as a key safe asset during the COVID-19 pandemic.

“Demand for safe assets like gold or dollars will continue to rise, as investors’ anxieties and insecurities won’t die down until COVID-19 is completely terminated. Thus, gold prices could rise further, as with upward trends of stock markets,” Chun Kyu-yeon, economist at Hana Financial Investment, pointed out.

With the soaring gold prices, the daily volume of gold trading has risen. According to the latest data released by KRX gold market, the average daily trading volume stood at 90 kilograms worth 5.78 billion won, a 106.4-percent year-on-year hike.

Since the state-run bourse operator opened the gold market back in 2014, the market grew by an annual average of 73.2 percent, achieving a 24-fold increase during the six years.