Soaring prices boost gold as investment, while traditional gift role fades

Gold jewelry pieces are showcased at a store in Seoul’s popular jewelry shopping district of Jongno in this undated photo. Yonhap

Min Da-young, the mother of a preschooler, is debating whether to sell the rings and other gold jewelry gifted for her son’s dol, a traditional 100-day celebration, as soaring gold prices offer a tempting opportunity for financial gain.

“I know dol gifts are meaningful, but with gold prices so high, I don’t want to miss the chance to profit,” she said.

Pure gold is currently priced at 908,000 won ($630) per 3.75 grams — the standard unit for retail gold purchases in Korea — up 70.3 percent from 533,000 won at the start of the year.

At the same time, she is wrestling with whether to give gold jewelry to her younger sister’s son for his upcoming dol, noting, “Rising gold prices have made these traditional gifts increasingly burdensome.”

Min’s dilemma illustrates a trend sparked by soaring gold prices, as the precious metal is increasingly seen as an investment while losing its appeal as a gift item, despite long-held traditions.

The Korea Gold Exchange forecasts that the price of pure gold could surpass the milestone of 1 million won per 3.75 grams as demand for the metal strengthens as a safe haven asset.

International gold prices on the New York Mercantile Exchange surpassed $4,505.70 per ounce last week, marking a 70.6 percent increase from $2,641 at the beginning of the year and the largest annual rise since the second 1979 oil crisis.

The surge has been fueled in part by a relatively weaker U.S. dollar, with the dollar index — which measures the currency against six major peers — down more than 10 percent this year, marking its steepest annual decline in 30 years.

The exchange also pointed to the prolonged war in Ukraine and other ongoing geopolitical tensions.

“Under these circumstances, we are seeing many customers visit jewelry districts to sell gold items they have kept at home for a long time,” a Korea Gold Exchange official said, citing heirloom hairpins, wedding rings and even gold dental work.

Choi Chul, a professor of consumer economics at Sookmyung Women’s University, said the rush to sell gold is likely to continue.

“More consumers now view gold as an investment asset, and given its perceived scarcity and role as a safe haven asset, demand for gold as an investment is unlikely to weaken easily,” he explained.

At the same time, the exchange noted that demand for gold as gifts is clearly waning due to high prices.

“Jewelry shops in Seoul’s Jongno district report that customers are far more likely to sell gold they already own or buy gold bars for investment than purchase jewelry,” the official said. “People try to give gold only when unavoidable, and even then, for weddings, births or other occasions, they try to minimize the cost.”

He also said demand for gold as corporate awards to honor outstanding employees has declined. “Even when companies maintain such practices, they increasingly reduce the weight of the gold bars, often cutting them by half compared with previous standards,” he said.