As the “kimchi premium” on gold traded domestically, which caused the domestic spot price of gold to be higher than the international market, disappears, the price of gold in Korea has plummeted more than fifteenfold compared to international prices.
According to the Korea Exchange (KRX) on the 4th, the price per gram of 1kg gold bars in the KRX gold market closed at 139,030 KRW on the 28th of last month. This represents a sharp drop of 14.98% compared to the closing price of 163,530 KRW on the 14th of last month.
On the 14th of last month, the price reached an all-time high of 168,500 KRW during trading before nearly declining every trading day over the next two weeks. Meanwhile, during the same period, the international gold price remained sideways.
The international spot price of gold, announced in Korean won by the Korea Exchange, fell from 136,130 KRW on the 14th to 134,830 KRW on the 28th, declining just 0.95% over two weeks. This drop occurred as the kimchi premium in the KRX gold market subsided.
On the 14th, the gap between domestic and international gold prices reached up to 24% during trading and hit 20.13% at closing, marking a record high. Subsequently, concerns about the kimchi premium on gold were raised, mainly within securities firms.
Experts suggested that investors switch their assets from KRX gold spots with excessive premiums to gold futures or international gold spots. This led the premium gap to collapse instantly, creating a short-term shock in the market.
However, as of the end of last month, major securities firms like Korea Investment & Securities, Samsung Securities, and Kiwoom Securities (through their exclusive domestic futures and options app) are the only ones confirming international prices or gold price discrepancies on MTS platforms.
#GoldPrice #KimchiPremium #Decrease