Interest in gold investment is rapidly cooling. The trading volume and value in the Korea Exchange (KRX) gold market have fallen to their lowest levels this year, and outflows from gold exchange-traded funds (ETFs) are also continuing. With the U.S. maintaining its tightening stance and expectations that the buying momentum from Chinese individual investors, which drove last year's gold price increase, will slow, recovery in gold investment sentiment is unlikely in the near term.
According to the KRX on August 5, the average daily trading volume of gold bullion (99.99%; 1kg) in July was 218,708 grams, a 51.6% decrease from June's 451,831 grams. The average daily trading value also dropped 54.4% to 42.659 billion won from 93.471 billion won the previous month. Compared to January's figures (1,011,913 grams; 233.764 billion won), trading volume has decreased by 78.4% and trading value by 81.8%, indicating a significant cooling of investment interest.
The downward trend has continued into August. From August 1 to 4, the average daily trading volume was 89,589 grams, with a trading value of only 16.683 billion won. Gold prices have also been on a decline since reaching a peak of 269,810 won on January 29, hitting a yearly low of 185,990 won as of the close on July 30.
Outflows from gold-related ETFs are also ongoing. According to Koscom ETF Check, the 'ACE KRX Gold Bullion' ETF saw the highest net selling by individual investors among commodity ETFs in the past month, with a net outflow of 26.5 billion won. The 'TIGER KRX Gold Bullion' ETF also recorded a net outflow of 12.9 billion won, ranking fourth. In total, these ETFs ranked 15th and 36th for net selling by individual investors across all ETFs. The outflows from both the physical gold market and gold ETFs reflect a general cooling of investment interest in gold.
Analysts attribute the sharp decline in gold trading to a contraction in investor sentiment rather than a simple price correction. With the U.S. tightening policy and high market interest rates persisting, gold's investment appeal has diminished, and some funds have shifted towards growth stocks like semiconductors, slowing the inflow of capital into the gold market.
Choi Jin-young, a researcher at Daishin Securities, noted, "Gold reflects liquidity before stocks, which are leading economic indicators, and its price has fallen more than 30% from this year's peak based on closing prices. This reflects concerns over policy rate hikes." Oh Jae-young, a researcher at KB Securities, stated in a recent report, "Global liquidity has been shifting towards certain assets like semiconductor stocks, leading to a contraction in gold investment."
Furthermore, as the environment remains unfavorable for gold prices, the buying enthusiasm of Chinese individual investors, who have been leading gold purchases, is also gradually waning. Choi mentioned the slowdown in China's gold reserves compared to last year, stating, "This is fundamentally based on portfolio diversification, and it is somewhat unrealistic to expect that the People's Bank of China's continued purchases will drive gold prices."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.