Gold draws renewed interest as Korean stocks tumble after US midterms
Summary
Gold investment has drawn renewed interest in Korea as bullion prices rebounded and domestic stocks fell sharply Friday following the Democrats’ capture of both chambers of Congress in the U.S. midterm elections. The election outcome raised expectations that Congress could curb President Donald Trump’s fiscal spending plans, putting pressure on Treasury yields and the dollar. Domestic spot gold closed at 176,690 won per gram, while the KOSPI and Kosdaq fell 6.02 percent and 5.03 percent, respectively. Analysts cited the weaker dollar, lower yields and stock-market losses as factors supporting gold, though it remained down more than 6 percent for the year.
Key Facts
- Domestic spot gold was 4.53 percent above its Nov. 2 level, despite closing slightly below the previous session.
- A don of pure gold, equivalent to 3.75 grams, cost 777,000 won, up from 730,000 won on Oct. 31.
- Overseas spot gold traded at $4,129.16 per ounce Thursday, up more than 6 percent for the week and on track for its biggest weekly gain since August.
- Citi set a short-term gold price target of $4,500 an ounce.
- Gold and silver surged last year as investors sought protection from market uncertainty, but lost ground this year amid rising interest rates and concerns about tighter monetary conditions.
An employee lifts up gold bars displayed at the Korea Gold Exchange in central Seoul, Feb. 4, 2025. Yonhap
Gold investment has drawn renewed interest in Korea as international bullion prices rebound while domestic stocks sold off sharply following the Democrats’ capture of both chambers of Congress in the U.S. midterm elections.
The election outcome raised expectations that Congress could curb President Donald Trump’s plans to expand fiscal spending, putting downward pressure on U.S. Treasury yields and the dollar.
Lower yields make gold, which pays no interest, more attractive, while a weaker dollar makes it cheaper for buyers using other currencies.
The domestic spot price of gold closed at 176,690 won ($130) per gram Friday, according to the Korea Exchange. Although slightly lower than the previous session, it remained 4.53 percent above its Nov. 2 level.
The modest decline followed a 2.64 percent gain Thursday, when gold finished at 178,460 won per gram, up 5.58 percent from Nov. 2.
In contrast, KOSPI and Kosdaq fell 6.02 percent and 5.03 percent, respectively, Friday, extending Thursday’s losses of 5.28 percent and 5.11 percent.
Retail prices also climbed. A don of pure gold, a traditional Korean unit equivalent to 3.75 grams, cost 777,000 won, up from 730,000 won on Oct. 31.
Overseas, spot gold was trading at $4,129.16 per ounce on Thursday, up more than 6 percent for the week and on track for its biggest weekly gain since August.
“Precious metals staged a sharp recovery from their year lows as the election results put pressure on the dollar and Treasury yields,” said Ok Ji-hoe, an analyst at Samsung Futures, adding that the prospect of political gridlock could limit new fiscal spending, further reducing the cost of holding nonyielding assets like gold.
The domestic stock market sell-off may have further increased gold’s appeal. Fears of tighter regulation of artificial intelligence data centers weighed on major semiconductor stocks, potentially encouraging investors to seek traditional havens.
Citi has set a short-term price target of $4,500 an ounce, suggesting further upside.
Still, it remains to be seen whether the latest recovery can hold.
Gold and silver surged last year as investors sought protection from market uncertainty, but lost ground this year amid rising interest rates and concerns about tighter monetary conditions. Despite the recent bounce, gold remains down more than 6 percent since the start of the year.
Explore More
- Q.
- Q.
- Q.