South Korean Retail Investors Rebound into Gold Market

South Korean retail investors have reversed their trend of selling gold after four months, turning net buyers in August. According to data from the Korea Exchange, retail investors purchased a total of 133 billion won ($96.3 million) worth of gold on the KRX market from the start of August through August 14.

This marks a significant shift from their previous behavior, as they had been net sellers for three consecutive months since May. The return to buying appears to be linked to the recent rebound in global gold prices, which has been driven by weaker US employment data, central bank purchases, and uncertainty over artificial intelligence investments.

Gold-related exchange-traded funds also saw increased buying activity during this period. Retail investors purchased 37 billion won ($26.8 million) of the ACE KRX Gold Spot ETF and 14 billion won ($10.1 million) of the TIGER KRX Gold Spot ETF, according to Korea Exchange data.

Jeong Hyun-jong, an analyst at Korea Investment & Securities, noted that gold prices are likely to continue fluctuating in response to changes in real interest rates and the dollar. While high interest rates may lead to short-term volatility, he believes that a sharp decline like in the past is unlikely due to structural factors such as central bank buying.