Investors engage in ‘bargain hunting’ due to dollar weakness
Gold-related products gain popularity amid economic uncertainty, “The dollar deposits at the five major domestic banks have increased by nearly 4 trillion won just this month. The tariffs triggered by the U.S. Trump administration have caused the dollar’s value to plummet, prompting a significant number of people to see this as a bargain-buying opportunity and consequently purchase dollars,” analysts observe.
According to the financial sector on the 21st, dollar deposit balances at the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) totaled USD 60.744 billion as of the 17th. This represents a 4.7% increase from the end of last month’s USD 58.02 billion.
“The dollar deposit balance at the five major banks fell to USD 56.35 billion by the 10th of this month, but it rebounded by over USD 4 billion to increase again within just five trading days until the 17th. Dollar deposits have shown an ‘inverse’ relationship, visibly decreasing when the KRW/USD exchange rate rises and increasing when the rate falls.”
The exchange rate peaked at 1,484.1 won at the close of trading during the week of the 9th when reciprocal tariffs from the U.S. came into effect, hitting its highest mark in 16 years since March 12, 2009 (1,496.5 won). Then, amid heightened concerns about U.S. inflation and a potential economic downturn, it dropped to 1,418.9 won on the 17th, its lowest since December 5 of last year (1,415.1 won). Experts state that a so-called “bargain sale” due to significant price drops is underway. They forecast that the confusion stemming from reciprocal tariffs is likely to persist for the time being, with the dollar’s weakness potentially causing further decreases in the exchange rate.
Amid increasing economic uncertainty, there is a trend of investing in gold-related products as a safe asset. As of the 17th, the gold banking balance at KB Kookmin, Shinhan, and Woori Bank reached 1,064.9 billion won. Hana and NH Nonghyup Bank do not offer gold banking. Gold banking allows buying and selling of gold in 0.01g units through a bank account with free deposits and withdrawals. The balance at these three banks has been breaking records daily since surpassing 1 trillion won at the end of last month. The ability to flexibly buy and sell gold without holding physical gold, regardless of subscription period or amount, is the key to its popularity.
Gold bars remain popular as well. The sales volume of gold bars at the five major banks reached 20.78 billion won by the 17th of this month. This amount is more than double the 9.94 billion won sold throughout April last year. The monthly gold bar sales increased gradually from November last year with 15.092 billion won, December’s 18.77 billion won, and January this year’s 27.031 billion won, before soaring to 88.293 billion won in February. However, subsequent unprecedented supply shortages led KB Kookmin and Woori Bank to fully suspend sales, causing the figure to drop to 38.64 billion won in March.
The rise in gold prices is rooted in overarching global economic uncertainty. With economic uncertainty growing, the demand for safe-haven assets has increased. As financial market turmoil intensifies, there is anticipation of a continued upward trend in gold prices, suggesting that investment movements in gold-related products are likely to continue. Some speculate that the price of gold might rise beyond USD 3,400~3,500 in the future.