Record High Again: How Far Can 1 Don of Gold at 1 Million Won Go?

According to The Financial News, the domestic price of one don (3.75 grams) of pure gold has exceeded 1 million won for the first time. Analysts attribute this to stronger safe-haven demand in global financial markets amid rising geopolitical tensions worldwide. Recent friction between the United States of America (U.S.) and Denmark over Greenland also appears to have played a role.
As gold prices hit all-time highs, large sums of money are also flowing into so-called “gold bank accounts,” or gold banking products. The balance of gold banking accounts at domestic commercial banks has surpassed 2 trillion won for the first time.
According to the Korea Gold Exchange on the 24th, as of the 21st the purchase price of one don (3.75 grams) of pure gold stood at 1,009,000 won, breaking above the 1 million won mark for the first time on record. At the beginning of last year, gold was around 500,000 won per don, meaning the price has nearly doubled in just one year.
Market participants believe there is still ample room for gold prices to rise. This month alone, continued geopolitical risks such as political turmoil in the Bolivarian Republic of Venezuela and escalating anti-government protests in the Islamic Republic of Iran have sustained investors’ preference for safe assets.
Monetary policy uncertainty, fueled by Donald John Trump ratcheting up political pressure on the Federal Reserve (the Fed), is also supporting higher gold prices.
The international gold price rally is continuing as well, with the metal now on the verge of breaking through 5,000 dollars per ounce for the first time in history.
On the New York Mercantile Exchange (NYMEX), February gold futures were trading at 4,981 dollars per ounce as of 10 a.m. on the 23rd (local time), up 1.4% from the previous session at the same time.
With expectations for further gains in gold prices persisting, money continues to pour into gold investment products.
According to the financial sector, the combined balance of gold banking accounts at three major commercial banks—KB Kookmin Bank, Shinhan Bank, and Woori Bank—reached 2.1298 trillion won as of the 21st. This comes about 10 months after the balance first surpassed 1 trillion won at the end of March last year and has now crossed the 2 trillion won threshold. Driven by strong investment demand, the balance has increased by about 197.8 billion won just since the start of the new year.
Gold banking is a product that allows customers to buy and sell gold in units as small as 0.01 gram through a bank account with no restrictions on deposits and withdrawals. Because investors can freely purchase and sell gold regardless of term or amount, it has become highly popular.
Investment in gold bars has also surged.
At the five major banks—KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, and NongHyup Bank (NH Bank)—gold bar sales totaled about 690 billion won last year, more than quadruple the 165.4 billion won recorded a year earlier. After some banks temporarily halted gold bar sales late last year due to shortages, sales resumed in the new year and investment demand is once again picking up. Shim Subin, researcher at KIWOOM Securities, said, "Gold prices may undergo a short-term correction, but they are highly likely to show a trend of gradually pushing their upper range higher, supported by structurally stronger demand."

gogosing@fnnews.com Park So-hyun Reporter