Gold fever hits market as Korean investors rush to purchase safe-haven asset

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Gold fever hits market as Korean investors rush to purchase safe-haven asset

Published: 12 Sep. 2025, 10:32 Updated: 12 Sep. 2025, 15:06

Audio report: written by reporters, read by AI

Gold bars are displayed at a jeweler in Jongno District, central Seoul, on Sept. 7. [YONHAP]

A surge in global gold prices has ignited a rush among Korean investors toward gold-related financial products and bullion, with gold accounts and bars seeing explosive demand.

The international price of gold has jumped nearly 40 percent this year, outpacing major stock indexes and cryptocurrencies, fueling the metal’s allure as a safe-haven asset.

Balances in gold banking accounts — known as “gold passbooks” — at KB Kookmin Bank, Shinhan Bank and Woori Bank totaled 1.23 trillion won ($886 million) as of Wednesday.

The number of accounts has grown by over 30,000 this year alone, drawing in 449.7 billion won in new capital.

These accounts allow investors to buy and sell gold by weight through a bank ledger, rather than handling physical metal. If the price of gold has risen when converting it to won and withdrawing cash, a profit can be made.

Gold bars, a favorite among high-net-worth individuals, have also seen robust sales. The four major commercial banks — KB Kookmin, Shinhan, Woori and Hana — have sold 327 billion won worth of gold bars through Wednesday. That figure is already more than double the full-year 2024 total of 159.6 billion won.

Global rally

The surge comes as gold smashes through all-time highs. On Wednesday, December gold futures on the New York Commodity Exchange closed at $3,682 per ounce. On the previous day, prices briefly spiked to $3,715, surpassing the $3,700 threshold for the first time ever.

Year-to-date, gold has gained 39.4 percent based on the Wednesday close. That outpaces the Kospi’s 38.1 percent rise and far exceeds the S&P 500’s 11.1 percent and Bitcoin’s 23 percent gain over the same period.

Korean prices have followed suit. On the Korea Exchange gold market, the price of 1 gram (0.04 ounce) of gold hit a record 167,740 won on Tuesday — up 31.2 percent from the end of last year. As a result, the retail price of a single don (0.06 ounces), commonly used in jewelry like first birthday rings, now reaches 730,000 won including VAT and fees.

'Gold may reach $4,000'

Market watchers expect prices to continue climbing as interest rate cuts loom in the United States.

There was a 90 percent probability as of 5:30 p.m. on Thursday that the U.S. Federal Reserve would lower rates by 0.25 percentage points at its meeting on Sept. 16 to 17, according to CME FedWatch. The chance of a more aggressive 0.5 percentage point cut — once considered off the table — has now risen to 10 percent, up from 0 percent just a week earlier.

“Gold prices may reach $4,000 per ounce by year-end, or at least early next year, given the start of Fed rate cuts and ongoing central bank buying,” said Hwang Byung-jin, a researcher at NH Investment & Securities.

An employee arranges gold products at Korea Gold Exchange in Jongno District, Seoul, on Sept. 9. [YONHAP]

That buying has become a major driver. Central banks have increased gold reserves by an average of 260 tons annually from 2022 to the first half of 2025, according to Shinhan Securities — twice the 130-ton average between 2015 and 2019.

The shift reflects an effort to diversify foreign reserves away from U.S. Treasurys, once seen as the safest asset class, amid concerns about mounting U.S. fiscal deficits.

Gold exchange-traded funds (ETFs) have also contributed to the rally. The World Gold Council reports that gold ETFs attracted $38 billion in net inflows in the first half of this year, with total holdings reaching 3,615 tons — the highest since 2022.

“I started buying gold bars last year,” said Park, 51, a small-business owner in Gyeonggi. “The price of one don of gold was just above 400,000 won back in March last year. Now it’s around 700,000 won. In uncertain times, nothing beats gold as an investment.”

With rising inflation expectations, geopolitical tensions and doubts about dollar-denominated assets, retail and institutional investors alike appear to be betting that gold has more room to run.

Global investment bank Goldman Sachs recently warned that if investors lose confidence in U.S. debt and the Fed’s independence weakens, gold could climb as high as $5,000 per ounce.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY YEOM JI-HYEON [[email protected]]