출처: Block Media
Gold Loses Shine as Risk-On Sentiment Soars and Flattened Prices Reflect Slowing Chinese Demand
(Seoul = Yonhap News) — Recently, South Korea's KOSPI index surged to a 46-month high, surpassing the 3,200-point mark after the inauguration of a new administration. This bullish rally underscores changing investor sentiment as the global appetite for risk-on assets shifts focus away from traditional safe havens like gold.
The surge in risk-on sentiment, referred to as "TACO Trade" (short for "Trump Always Chickens Out"), has sparked a global shift toward riskier investments. Concurrently, Chinese demand for gold has tapered, contributing to stagnation in gold prices over the past two months and diminishing its allure.
South Korean Gold Market Sees Selloff as Investors Pivot to Riskier Assets
Data from the Korea Exchange (KRX) on July 22 reveals that individual investors net sold 15.9 billion won worth of gold in the KRX Gold Market between July 1 and July 21. On July 21 alone, investors offloaded 11.1 billion won of gold — signaling a significant break from their 15-month streak of net buying that began in March 2020.
From April 2020 to June 2021, individual investors collectively poured 1.466 trillion won into gold, driving trading volumes in the KRX Gold Market to a record-breaking 37.3 tons during the first half of 2021. Retail gold buying peaked during October 2020, as market uncertainties surrounding the U.S. presidential elections led to net purchases worth 151.3 billion won. March 2021 saw additional spikes in gold buying, with purchases totaling 328.8 billion won amidst concerns over tariffs imposed by then-president Donald Trump.
However, net buying volumes have steadily declined since April, with figures sliding to 43.6 billion won in that month, 90.6 billion won in May, and 60.7 billion won in June — culminating in net sales during July.
Global Gold Prices Enter Prolonged Stagnation
The primary catalyst for South Korea’s gold selloff is the stagnation of international gold prices. Gold prices, which closed at just over $2,600 per ounce at the end of 2020, surged to $3,487.94 on April 22, 2021. Since then, prices have dipped slightly and entered a prolonged range-bound trading phase. As of July 21, international gold prices hovered around $3,369.86 per ounce.
Likewise, the average price for one kilogram of bullion (99.5% purity) in the KRX Gold Market remained steady at 154,000 won per gram as of July 21—echoing prices from late April when gold traded at 151,800 won per gram.
Choi Jin-young, a researcher at Daishin Securities, highlighted in a recent analysis, "The range-bound price movement can largely be attributed to weakening demand from China, which has historically driven growth in gold prices."
Chinese retail investors purchased 63 tons of gold via spot ETFs during the first half of the year. However, regulatory crackdowns on speculative gold-related investments since May have curbed this buying activity, dampening upward momentum in gold prices.
Gold Loses Out to Alternative Assets
Investment diversification trends are also playing a role in gold’s diminished appeal. Capital outflows into alternative assets such as Bitcoin (BTC), silver, and platinum have attracted investors away from gold, further weighing on its prices.
Equities in the Spotlight as Risk Appetite Climbs
As investors turn away from safe-haven assets, risk-oriented investments, particularly stocks, are witnessing a surge in interest.
According to data from the Korea Financial Investment Association, investor deposits — indicative of cash reserves earmarked for stock market investments — climbed from 54.24 trillion won at the end of 2020 to 65.36 trillion won by July 18, marking a substantial 20.5% increase within just six months.
In parallel, margin financing — which tracks the amount of borrowed funds used by investors to buy stocks — jumped by 37.5% during the same timeframe, growing from 15.81 trillion won to 21.75 trillion won.
Market experts attribute this pivot toward equities to buoyant market sentiment and the muted performance of traditional safe-haven investments like gold.
As investors continue to pursue higher returns in risk assets, a notable reallocation of portfolios away from gold highlights changing trends in global financial markets.
For inquiries: hwangch@yna.co.kr
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