Commercial lenders halt gold bar sales amid surge in demand for safe-haven assets
Gold bars are on display at the Korea Gold Exchange, Sunday. Yonhap
Leading commercial lenders are either halting or limiting sales of gold bars, prompted by the rapid depletion of the precious metal supplied by Korea Minting and Security Printing Corp. (KOMSCO), a state-run organization, according to market watchers Wednesday.
Behind the move is risk-averse investor sentiment due to Trump’s tariff uncertainties, as central banks around the world are increasing gold holdings in their portfolio.
Spot gold hit a year-to-date high of $2,911.30 (4.2 million won) per ounce Monday (local time), the seventh new high this year. Some expect the price will soon exceed $3,000.
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According to sources in the financial industry, KOMSCO has informed commercial lenders that it will halt or curtail the supply of gold bars.
KB Kookmin said Wednesday that it decided to halt gold bar sales. Woori, Shinhan and Hana, with suppliers other than KOMSCO, will be able to sell them. Woori’s sale will be limited to 1 kilogram gold bars.
The combined gold banking accounts at KB Kookmin, Shinhan and Woori came to an all-time high of 277,551 as of last Friday, up 20,000 from a year earlier.
The combined balance of the accounts stood at 835.3 billion won as of January, up 268.5 billion won, or 47.4 percent, from the previous year.
Gold banking is where account holders can buy as little as 0.01 grams without storage concerns.
Also on the rise are gold bar sales.
KB Kookmin, Shinhan and Hana sold a combined 137.7 billion won worth of gold bars in January, up 167 percent from 51.5 billion won a year earlier. This amounted to 1,243 kilograms, up 92.9 percent from the previous year's 644 kilograms.
Gold bar sales reached 16.8 billion won in the first 12 days of February, up from December's 14.2 billion won.
On Feb. 5, the Korea Exchange (KRX) said daily gold trading volume hit 108.8 billion won, a first for the figure to surpass the 100 billion won mark. The figure further jumped to 111.2 billion won the day after before hitting a new high of 169.1 billion won on Friday.
Experts say the popularity of gold as a hedge against geopolitical uncertainty and inflation is likely to continue for the time being, driven by the Trump administration’s policies, which are fueling uncertainty, and U.S. inflation showing no immediate signs of cooling to below 2 percent.
A Macquarie report said gold may be in trouble in the first quarter of 2025 due to a stronger dollar, but it will expand gains afterward.
Macquarie analyst Marcus Garvey said gold prices will surge if Chinese demand picks up or if U.S. President Donald Trump's policies worsen the U.S.' fiscal outlook.