Gold investors rake in profit amid virus scare

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By Lee Kyung-min

Gold has generated the most handsome returns over the past few months amid the fast-spreading new coronavirus, data showed Sunday.

The double-digit profit margin over the past three months of the safe-haven asset is expected to continue as the global economy scrambles to fight against the heightened uncertainty involving the rapid spread of the virus.

According to the gold bourse of the Korea Exchange (KRX), the price of gold stands at 64,010 won ($53.74) per gram as of March 6, a whopping 13.21 percent year-to-date increase from 56,540 won Dec. 31 2019.

This is the highest year-to-date profit derived among other investments.

The gold price hit a record-high touching 64,800 won Feb. 24, all the while the local stock market dipped by 3.87 percent amid corona virus fears.

The volatile stock market saw a 7.16 year-to-date drop, after the primary KOSPI fell below 2,050, pushing down the related indices along with it.

KODEX 200, an exchange-traded fund (ETF) tied to the KOSPI 200, fell 6.22 percent year to date.

The average return of the equity fund with over 1 billion won in net assets also fell 6.61 percent year to date.

An increasing number of investors will opt for the traditional safe-haven asset in the coming months as the virus scare is not likely to die down any time soon.

“The virus scare is spreading in the financial market,” a NH Investment and Securities analyst Hwang Byeong-jin said.

“Gold is fast emerging as an alternative investment amid decreasing yield on the government bonds amid the low interest rate. Other than a possible adjustments in price to balance out a rapid hike over the past few months, the price will continue its upward trend.”

The price of gold in the global market jumped almost 7 percent with the price nearing $1,700 per ounce in the first week of March, the biggest weekly gain in 11 years.

Gold futures for April delivery on New York's COMEX settled up $4.40, or 0.3 percent, at $1,672.40 per ounce March 6 (local time).

In terms of a weekly performance, gold futures jumped 6.7 percent, their biggest weekly gain since 2009.

The previous session high for gold in April was $1,690.65.

Spot gold was at $1,672.29, down 9 cents, or 0.01 percent.

Gold, traditionally a safe asset, has been trending for some time as the global economy has been trapped by slow growth, worsening U.S.-China trade disputes and geopolitical risks as some emerging economies seek to diversify their assets away from the dollar.