South Korean Gold Prices Plummet Amid Rising Interest Rates

The price of gold in South Korea has dropped by over 10% in just one month, hitting its lowest point since September last year. According to the Chosunbiz report, the price of 99.99% pure gold on the Korea Exchange (KRX) closed at 181,460 won per gram yesterday, down from 203,010 won a month ago. This decline is attributed to the possibility of an additional Federal Reserve rate hike, which has pushed up yields on Government Bonds.

The potential for higher interest rates has led funds that had invested in gold to flow out of the market and into bonds. International gold prices are also falling, trading around $4,180 per ounce, down over 6% from a month ago. The rise in oil prices due to geopolitical tensions and inflationary pressures is another factor contributing to the decline in gold.

In response to the falling gold prices, the Bank of Korea (BOK) plans to resume purchases of physical gold, such as gold bullion and gold bars, for the first time in 13 years. A BOK official stated that the interest in gold as a safe asset has increased significantly among central banks due to ongoing geopolitical risks.