Is "gold fever" raging in Korea?

According to CNBC, the largest convenience store chain in South Korea - CU, has just partnered with the Korea Mint, Printing Security and Identification Card Manufacturing Corporation (KOMSCO) to sell mini gold bars at many of its outlets. Similarly, at the GS25 convenience store chain, customers can also buy small gold bars from vending machines.

Gold bars on sale in South Korea. Photo source: Yohan News Agency

It is known that gold bars sold at CU often come with congratulations, thanks and unique designs. A 1.87 gram gold bar sold at CU costs 225,000 won (about 4.2 million VND) and a 0.5 gram bar is sold for 77,000 won (about 1.4 million VND). Notably, according to Korean media channels, the 1 gram gold bar (priced at 113,000 won, equivalent to 2.1 million VND per bar) was sold out within just 2 days of going on sale.

According to the CU report, South Koreans in their 30s are the most active buyers of gold bars, accounting for more than 41 percent of total gold sales since its launch. Those in their 40s accounted for 35.2 percent of sales, followed by those in their 50s at 15.6 percent.

A recent report by the World Gold Council (WGC) said that the quarterly growth in gold purchases in the South Korean market is the highest in the past two years. Specifically, according to WGC, the demand for gold bars and coins in South Korea increased by 27% compared to the same period last year, to 5 tons in the first quarter of this year amid rising global gold prices. Last month, the world gold price reached a record high of 2,431.29 USD/ounce amid rising tensions in the Middle East. Since the beginning of this year, the world gold price has increased by 13%, continuing the 13% increase in 2023.

“Typically, in times of economic uncertainty and currency depreciation, demand for gold increases as domestic investors seek safe-haven assets,” Heng Koon How, head of market research at UOB Bank, told CNBC. The South Korean won has weakened more than 5% against the US dollar this year, currently trading at 1,358.7 won per dollar. In contrast, the price of gold in the country has risen to a record 456,000 won per 3.75 grams, according to the Korea Gold Exchange.

The “gold rush” in South Korea may also spread to the country’s central bank in the near future. According to Mining news site, the Bank of Korea is considering increasing its gold reserves in the medium and long term. Previously, the bank’s Reserve Management Group also highlighted the benefits of gold as a hedge against inflation and an alternative to the US dollar.

However, the Bank of Korea is still taking a cautious approach. “We have no plans to buy gold right now,” Kwon Min-soo, head of the Bank of Korea’s reserve management team, told Reuters in an interview. “South Korea’s foreign exchange reserves must increase sufficiently and the foreign exchange market must stabilize for us to consider buying more gold as a reserve asset.”

Not only in Korea, the WGC has also seen a growing trend of gold investment in Asia, despite record high prices. Mr. Shaokai Fan, CEO of the Asia-Pacific region of the WGC, shared with CNBC: “For the first time in a generation, many Asian economies are facing inflation and financial instability. It is logical that many investors are looking at gold as a way to diversify and protect their assets.”

A prime example of this is China’s youth, where Gen Z consumers are increasingly collecting tiny gold beans in glass jars. China is also leading the way in gold bar consumption, with the country surpassing India in 2023 to become the world’s largest buyer of gold jewelry.

World gold price chart at 14:52 on May 9, 2024

The world gold price situation today, May 9, 2024, has a slight increase compared to the opening session the previous day. Specifically, at 14:52, the world gold price was at 2309.08 USD/ounce, up 0.05% (ie 1.11 USD) compared to the previous day.

Gold price list of Saigon Jewelry Company Limited - SJC at 14:23 on May 9, 2024

In contrast to the world gold price situation, today's gold price in our country increased like a "storm", reaching a new record. At 14:23, the gold price listed by Saigon Jewelry Company Limited - SJC was 87 million VND for buying and 89.3 million VND for selling. Thus, the price of SJC gold has increased sharply compared to yesterday: up to 1.8 million VND for buying and selling.

Analyzing the reasons for the record high increase in domestic SJC gold bar prices, many experts said that, in addition to the unsuccessful gold bar auctions, domestic investors are currently attracted by the soaring gold price in the first quarter of 2024, especially when faced with high energy prices, which are forecast to boost inflation and the domestic currency to depreciate against the USD. The price difference for gold bars has reached a record high of 650 USD/ounce.

Source: https://congthuong.vn/con-sot-vang-dang-hoanh-hanh-tai-han-quoc-319142.html