Korea Gold Prices Plummet Amid Rising Interest Rates

The price of gold in South Korea is experiencing a significant drop due to rising interest rates and yields on Government Bonds. Last month, gold prices had reached the 200,000 won per gram range but are now near the 170,000 won range. This decline is attributed to the possibility of an additional Federal Reserve rate hike, which has led funds to flow out of the gold market.

The price of 99.99% pure gold in the Korea Exchange (KRX) gold market closed at 181,460 won per gram on August 28, but has dropped by over 10% to this point. The lowest price since September 26 last year was 179,800 won per gram. International gold prices are also falling, with spot gold trading around $4,180 per ounce, a decrease of more than 6% from a month ago.

The Federal Reserve's potential additional tightening is cited as the reason for the drop in gold. As international oil prices have risen amid geopolitical risks, inflationary pressures have grown, and projections that the Fed could raise its benchmark rate again are coming one after another. The Bank of Korea (BOK) plans to resume purchases of physical gold such as gold bullion and gold bars in the KRX gold market at the end of this year for the first time in 13 years.