South Korea's KRX gold market recorded a daily average trading volume of 239,116g this month, down 49.0% from last month's 469,019g, according to Korea Exchange data released on the 26th. Daily average trading value fell 51.5% to 47.009 billion won from 97.012 billion won. The sharp decline followed a 29.7% drop in gold spot prices from the January 29 high of 269,810 won to 189,810 won on the 24th. The trading contraction reflects weakened investor sentiment as US monetary tightening continues and Chinese individual investor buying—which drove last year's price gains—has slowed significantly.
KRX Gold Market Trading Volume Drops 49% Month-Over-Month
Korea Exchange data showed the KRX gold market's daily average trading volume for gold spot (99.99%, 1kg) this month reached 239,116g, down 49.0% from last month's 469,019g. Daily average trading value declined 51.5% to 47.009 billion won from 97.012 billion won. Compared to January, trading volume decreased 77.1% and trading value fell 80.6%.
The simultaneous decline in both price and trading volume indicates investor caution rather than bargain-hunting demand. While significant price drops typically attract bottom-fishing buyers, recent market activity shows investors adopting a wait-and-see approach.
Gold Spot Prices Fall 29.7% From January Peak
KRX gold market spot prices (99.99%, 1kg) reached a high of 269,810 won on January 29 before declining to close at 189,810 won on the 24th, a 29.7% drop from the peak. Exchange-traded notes (ETNs) tracking the KRX gold spot index fell 30.0% from their high.
US Monetary Policy and China Demand Slowdown Cited as Key Factors
Securities analysts attributed the weakened gold investment appeal to continued US monetary tightening and elevated market interest rates. As a key liquidity hedge asset, gold remains vulnerable to liquidity contraction and high-interest-rate environments, with this year's price decline reflecting these macroeconomic conditions.
The slowdown in Chinese individual investor buying—a major driver of last year's price gains—added further pressure. While China's central bank continues gold purchases as part of foreign reserve diversification, the volume does not suffice to lift prices. Chinese gold ETFs experienced fund outflows, and individual investor buying enthusiasm cooled compared to previous periods.
Choi Jin-young, researcher at Daishin Securities, stated: "The People's Bank of China's gold reserves in June reached 2,321.6 tons, up 27 tons year-over-year, but significantly slower than the 266-ton increase in 2023. As the Chinese government's economic stimulus capacity remains limited, the buying momentum from Chinese individual investors that drove last year's gold price gains is likely to weaken further."
Analysts Project Potential Recovery in Late Second Half
Some analysts suggest investment sentiment may partially recover in the latter half of the second half. Declining oil prices could ease inflation pressures, potentially reducing excessive tightening concerns currently reflected in markets.
Securities firms expect strong US economic performance, a strong dollar, and hawkish monetary policy to pressure gold prices through Q3 and Q4. If price stability is confirmed and tightening concerns ease afterward, precious metal investment sentiment could gradually improve.
Park Ju-ran, senior researcher at Samsung Securities, stated: "A conservative approach is needed through Q3 and Q4 due to hawkish monetary policy concerns and gold ETF fund outflows. However, if inflation easing is confirmed in Q4 and tightening fears subside, a gradual rebound could occur by year-end."
FAQ
How much did South Korea's gold trading volume decline this month?
Korea Exchange data showed daily average trading volume for KRX gold market spot (99.99%, 1kg) this month reached 239,116g, down 49.0% from last month's 469,019g. Daily average trading value fell 51.5% to 47.009 billion won from 97.012 billion won.
What factors caused the decline in gold investment in South Korea?
Analysts cited continued US monetary tightening and elevated market interest rates as weakening gold's investment appeal. The slowdown in Chinese individual investor buying—which drove last year's price gains—also contributed. Choi Jin-young of Daishin Securities noted China's central bank gold reserve growth slowed significantly, with June reserves at 2,321.6 tons, up only 27 tons year-over-year compared to a 266-ton increase in 2023.
