Even as the stock market swings, gold fails to rebound... Returns plunge 13% in three months

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[Financial News]"They said it was a safe asset, so why am I in the red?"Gold prices have been weak day after day this year, deepening the frustration of investors in gold products. Domestic gold funds have posted double-digit losses over the past three months, and some investors have already cut their losses. As expectations grow for further interest rate hikes by major central banks, market watchers say a rebound in gold prices is unlikely for now.
According to FnGuide on the 5th, the 3-month return on 13 domestic gold funds with assets of more than 1 billion won stood at -13.68%. Their 1-month return was 0.11%.
Money has also been flowing out quickly. Based on the past three months, 81.1 billion won left gold funds. Over the past month alone, 76.9 billion won was withdrawn.
Redemptions were also pronounced by product. Over the past three months, 54.8 billion won in net outflows were recorded from the KODEX Gold Active ETF. Investors also pulled money from the ACE KRX Physical Gold ETF, which saw 27.1 billion won in outflows, and the SOL International Gold fund, which saw 25.7 billion won in outflows.
The decline in fund returns appears to have driven investors away as gold prices weakened. According to the Korea Exchange (KRX), the price of the 1kg gold product traded on the KRX Gold Market closed at 218,550 won per gram on the day. That was 9.5% lower than 241,600 won three months earlier.
Gold, widely regarded as a safe-haven asset, often moves in the opposite direction of risk assets such as stocks. As the KOSPI (Korea Composite Stock Price Index) surged close to the 9,000 level last month and the stock market remained buoyant, funds shifted into equities, and gold prices failed to gain momentum.
However, despite greater stock market volatility this month, gold prices have remained sluggish, largely due to concerns over tighter monetary policy. Inflation worries have intensified as oil prices jumped on the prolonged war between the United States and Iran, raising the prospect of central bank tightening around the world. The yield on the U.S. 30-year Treasury note rose to 4.990% on the 3rd, local time.
When bond yields rise, gold prices generally tend to fall. That is because the perceived price of gold, which is traded in U.S. dollars, becomes higher, and the relative appeal of holding gold declines as bond yields rise.
As the likelihood of rate hikes by global central banks grows, market analysts expect gold prices to remain subdued for the time being.
Kim Yoon-jung, a researcher at LS Securities, said, "The recent surge in bond yields is continuing." She added, "There is an interpretation that this is a wave of Treasury selling by bond vigilantes urging a response to inflation ahead of Kevin Warsh's formal appointment as Fed chair."
nodelay@fnnews.com Park Ji-yeon Reporter