Anna Jiwon Park has been covering the politics at The Korea Times since the summer of 2024, when she joined the press pool for the Office of the President in Korea. Prior to that, she spent about five years reporting extensively on financial markets, regulatory authorities and the financial industry. She joined The Korea Times in 2019 after spending eight years as a broadcast journalist at Arirang TV, Korea’s leading global broadcaster, covering politics, defense and culture.
Investors fleeing to gold, bonds amid mounting virus fears
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By Anna J. Park
By Anna J. Park
Investors here and abroad are flocking to safe-haven assets, such as gold and treasury bonds, amid growing fears that the financial malaise caused by the rapid spread of the coronavirus is spreading worldwide.
According to the gold bourse of the Korea Exchange (KRX), the price of gold hit an all-time high Tuesday, closing at 64,800 won ($53.36) per gram, up 3.09 percent from the previous day. It was the highest price recorded since the gold bourse opened in March 2014.
Gold futures traded on the New York COMEX also reached the highest prices in seven years. On Monday (local time), the precious metal's price climbed up to $1,688.86 per troy ounce ― its highest level since January 2013.
Against this backdrop, 12 gold-related funds in Korea have posted handsome average returns of 6.49 percent during the past month, according to data by FnGuide.
Government bonds, considered another safe-haven asset, are also gaining popularity.
The yield on Korea's government bond with three-year maturity declined to 1.139 percent Tuesday, down 4.3 basis points from the previous close, while the 10-year bond yield fell to 1.416 percent from 1.443 percent. At times of market turbulence, bond prices rise in line with higher demand, and bond yields, accordingly, decrease.
The popularity of treasuries is also rampant overseas. The 10-year U.S. Treasury yield fell to 1.4 percent Monday (local time) ― its lowest level since 2016 ― while the 30-year U.S. Treasury return dropped to a low of 1.8 percent.
Economist Park Sang-hyun at Hi Investment & Securities said that investors' current preference for safer assets could continue for a while.
“Basically, gold or treasury bonds enjoy higher demand during market downturns or pandemic situations like now. Their current surged prices will correct to a normal level after the spread of the disease is somewhat stabilized,” economist Park told The Korea Times.
“Treasury bonds, especially from those from the U.S., will be more in demand, because dollars are also on the rise, amid uncertainties. Also, long-term bonds could be more favorable, as they are less influenced by short-term policies than shorter-term bonds. In that regard, institutional investors seek more mid-term or long-term bonds to make their portfolios safer,” he added.