Gold investment demand is picking up again as South Korea's stock market shows unstable movements.
Gold holdings in gold banking accounts at KB Kookmin Bank, Shinhan Bank and Woori Bank (000030) totaled 9,184 kilograms as of the 14th, according to financial industry sources on the 18th.
Holdings stood at 9,943 kilograms at the end of January but fell to 9,082 kilograms by the end of July as investors redeemed their holdings. The trend then reversed, rising to 9,111 kilograms at the end of August and 9,169 kilograms at the end of last month. The increase has continued this month.
Demand for gold bars has also held steady. The five major banks sold 10.9 billion won ($7.6 million) worth of gold bars between the 1st and the 14th. Sales reached 33.5 billion won in August and 29.1 billion won in September. While that falls short of January's 90 billion won during the gold rush, monthly demand of 20 billion to 30 billion won is still being generated.
Market participants say gold prices look relatively attractive. The price of gold on the Korea Exchange (KRX) was 179,200 won per gram as of the 16th, down 33.6% from its late-January peak of 269,810 won. A private banker at a commercial bank said, "If safe assets account for less than 10% of an asset portfolio, now is a good time to add gold while the price is below 180,000 won per gram."
Banks are also expanding sales by lowering the barrier to entry. Hana Bank will cut the minimum purchase unit for gold bars to 3.75 grams from 10 grams starting at the end of this month.