Gold Trade Increases Three Fold Since 2014
The gold bourse of Korea Exchange (KRX), the only gold spot market in South Korea, has grown by more than three times in five years since its establishment.
KRX said on March 21 that a total of 19 tons of gold worth 863 billion won (US$764.94 million) have been traded so far on the bourse after the establishment in 2014.
The daily average trading volume on the gold bourse stood at 19.3 kilograms this year, up 244.6 percent from five years ago, while the amount of daily average turnover came to 910 million won (US$806,452), showing a 279.2 percent growth. The cumulative trading volume and turnover are expected to surpass 20 tons and 1 trillion won (US$886.45 million), respectively, by the end of the year. The daily average turnover peaked at 1.06 billion won (US$939,883) in 2017 and then fell to 880 million won (US$780,142) last year. However, the figure is bouncing back this year. This is because gold production in South Korea decreased last year, leading to a lower gold supply to the KRX gold market.
Gold is now traded at 47,640 won (US$42.23) per gram on the KRX bourse, up 1.5 percent from the 46,950 won (US$41.61) recorded on the opening day. The price has shown a steady upwards curve since September last year. The market price has been set between 100 percent and 100.35 percent of international gold prices over the past three years. Moreover, KRX offers gold to investors at a reasonable price as the price is 0.5 percent to 1.5 percent lower than the curb market, or jeweler's shops.
By type of investor, individuals accounted for the majority, or 59 percent, this year, while businesses took up 25.3 percent of the total investors. Back in 2014, wholesalers accounted for 45.3 percent and individuals 54.7 percent. In particular, the proportion of institutional investors increased to as much as 15.5 percent this year as they have been participating in the business after the introduction of the liquidity provider (LP) system in July 2016.
KRX is planning to improve the system as well as to develop gold-related products in order to legalize under-the-table transactions. The demand for gold is forecast to grow as there is anincreasingpreferencefor risk-free assets with growing uncertainties in the global economy.