Has gold hit bottom? Rebounds 5% in a week from its lowest level of the year

[Financial News] Domestic gold prices, which had fallen to their lowest level of the year as of the 10th, rebounded nearly 5% in just a week. However, trading value in the domestic gold market remains at its lowest level of the year. Market analysts say it is worth watching whether concerns over U.S. interest rate hikes ease and international gold prices stabilize above $4,200 an ounce.
According to the Korea Exchange (KRX) on the 11th, spot gold closed at 177,290 won per gram on the KRX Gold Market the previous day. That was up 4.92% from 168,970 won on the 3rd, when it recorded its lowest closing price of the year. It was also up 3.67% from the closing price at the end of October.
Domestic gold prices rose from 206,190 won at the end of last year to 269,810 won on January 29 this year. They then fell for six consecutive months, from February through July, based on month-end closing prices. Prices rebounded 4.81% in August, but fell 6.89% and 6.52% in September and October, respectively, giving back those gains. On the 3rd of this month, they had fallen to 37.37% below the January peak. Despite the recent rebound, the previous day’s closing price remained 34.29% below the peak.
International gold prices also rebounded. From the 30th of last month through the 6th of this month, the international spot price of gold rose 5.1%. Analysts say bargain buying flowed in after international gold prices fell 6.8% last month, while central bank purchases also supported prices. According to the World Gold Council, central banks around the world are estimated to have been net buyers of 321 tonnes of gold in the third quarter of this year.
Trading in the domestic gold market remained sluggish despite the price rebound. The average daily trading value this month was 25.29 billion won, down 11.3% from 28.5 billion won last month. That was about one-tenth of the 241.705 billion won recorded in January this year. Average daily trading volume also fell 86.2% over the same period, from about 1,046 kg to 144 kg.
Movements also diverged among investor groups in international markets. Last month, funds flowed into gold exchange-traded funds (ETFs) in Europe and Asia. By contrast, asset managers’ speculative net long positions in the COMEX gold futures and options market fell to around their late-June low.
Market analysts cite whether concerns over U.S. interest rate hikes subside as a factor that could determine whether the gold price rebound continues. Because gold pays no interest, its investment appeal declines relative to interest-bearing assets such as bonds when interest rates rise.
Park Ju-ran, a researcher at Samsung Securities Co., Ltd., said, “Assuming oil prices gradually decline and concerns over Fed tightening ease, one could consider approaching gold from a long-term investment perspective.”
[email protected] Bae Han-geul Reporter