"The Bank of Korea Joins In: Central Banks Resume Buying, ETF Inflows Rebound... Gold Prices Surge Again"

Gold Prices Recover to $4,400 After Two Months
Driven Higher by Renewed Central Bank Buying
Bank of Korea Invests in Gold for the First Time in 13 Years
Forecasts Point to $5,000 by Year-End

After a period of correction, gold prices have started to surge again, recovering to the $4,400-per-ounce level for the first time in more than two months. This upward momentum is being sustained by renewed buying by global central banks, renewed capital inflows into exchange-traded funds (ETFs), and growing concerns about a slowdown in the U.S. economy. Analysts in the securities industry predict that gold will settle at $5,000 by the end of the year.

According to Investing.com, as of 3 p.m. on the 13th, December gold futures were trading at $4,432.22 per ounce, up 10.63% over the past month. Gold entered a full rebound this month, breaking out of its previous trading range. After recording an all-time closing high of $5,318 at the end of January, gold futures dropped as much as 25% to $3,990 on June 24, compared to the previous peak. Afterward, the price remained in a box range around the $4,000 level, undergoing a period of correction.

Sungki Hong, a researcher at LS Securities, explained, "Gold prices broke above their five-month downward trendline last week, rising 10% from the July low," adding, "After bottoming in a narrow range between $4,000 and $4,200 for about a month from late June, gold broke through both the trading range and the downward trendline this month."

The recent rebound in gold has been attributed to renewed central bank buying and capital inflows into ETFs. According to the World Gold Council (WGC), global central banks' net gold purchases in the second quarter of this year reached 288.9 tons, up 62% from the same period last year. Researcher Hong noted, "Central bank gold purchases hit a quarterly low of 56 tons in the first quarter—the lowest since 2022—but buying picked up in the second quarter, reaching a quarterly high of 289 tons." He added, "The People's Bank of China, in particular, sharply increased its official gold purchases from 1.2 tons in January to 14.9 tons in June, likely taking advantage of lower prices to buy at a discount."

The Bank of Korea has also resumed gold investments for the first time in 13 years. According to a U.S. Securities and Exchange Commission (SEC) filing dated August 12 (local time), the Bank of Korea reported holding 679,765 shares of SPDR Gold Shares (GLD)—a major gold ETF listed on the U.S. stock market—as of the end of the second quarter. The valuation at the end of the second quarter was $250.41 million (approximately 355 billion won), marking the first time the Bank of Korea has purchased gold assets since acquiring 20 tons of physical gold in 2013.

Yechan Choi, a researcher at Sangsangin Securities, commented, "Last October, the Bank of Korea announced it had no plans to increase its gold holdings, but reversed this position after just nine months." He added, "However, this is not an independent decision by the Bank of Korea. In a global central bank survey, gold's share of total forex reserves is expected to reach the highest level in 2024, at 83%, and 45% of respondents said they planned to increase their gold holdings. Central banks' gold buying to reduce reliance on the dollar is a structural trend likely to continue over the medium and long term."

Capital inflows into gold ETFs have also resumed. According to financial data firm FactSet, $1.59 billion flowed into U.S.-listed gold ETFs last week. Researcher Hong explained, "ETF inflows resumed from late July. The ceasefire in the Iran war in mid-June led to a rapid decline in oil prices, which eased expectations for further rate hikes from the U.S. Federal Reserve. As a result, the rising trend in long-term real interest rates slowed, and demand for gold investment rebounded."

Disappointing U.S. employment data released recently has further stimulated demand for gold. Researcher Hong noted, "Until now, gold prices were weighed down by expectations of Fed rate hikes stemming from inflation concerns due to the Iran war. However, as employment data worsened, concerns over both inflation and economic slowdown have created the optimal conditions for a gold rally, acting as a significant catalyst for price gains."

With gold prices continuing to rise, there are now forecasts for gold to settle at $5,000 by year-end. Researcher Choi commented, "Historical comparisons to previous gold bull markets suggest we are now passing through a bottoming phase." He added, "In previous downturns where gold fell over 15% from its peak, it typically took an average of eight months to find a bottom, after which prices recovered about 90% of the prior peak over the following 12 months. Based on this pattern, additional gains toward the $5,000 level by year-end are possible."

This content was produced with the assistance of AI translation services.