Gold prices have reached a record high once again, with trading volumes also hitting an all-time peak, driven by escalating geopolitical tensions and economic concerns. The surge follows the Trump administration’s imposition of an additional 10 percent tariff on China, which prompted retaliatory measures from Beijing. As a result, investors flocked to gold, a traditional safe-haven asset, pushing prices to new heights.
The tariff war, initiated by former U.S. President Donald Trump, has intensified, creating significant uncertainty in global markets. In South Korea, this uncertainty has contributed to record gold trading volumes. The demand for gold has been further fueled by concerns over an economic slowdown, continuous gold purchases by central banks worldwide, and the ongoing tariff conflict. Analysts predict that gold prices could potentially reach $3,000 per ounce this year.
On February 5, the Korea Exchange (KRX) reported that the gold spot price per gram for 1kg gold bars surged by 4.58 percent, or 6,470 won (approximately $4.47), to 147,820 won, marking an all-time high. The daily gold trading volume reached 108.84 billion won, the highest since the market’s establishment in March 2014. The price of a “don” of gold (3.75g) climbed to 554,325 won, approaching 600,000 won. The cost of a handcrafted one-don gold ring, including processing fees, has already exceeded 600,000 won.
Gold futures for April delivery on the New York Commodities Exchange (COMEX) also reached a new high, trading at $2,875.8 per ounce (31.1g) on February 4. In line with this trend, the ACE KRX Gold Spot ETF, a leading gold investment product, saw a net inflow of 10.1 billion won from retail investors on February 3 alone. As the only ETF investing in gold spot prices in South Korea, the product has attracted over 100 billion won in capital this year, benefiting from both the rise in gold prices and foreign exchange gains due to the strength of the U.S. dollar.
The primary driver behind the recent surge in gold prices is the tariff policies implemented by the Trump administration in its second term. Higher tariffs create inflationary pressures, erode the value of currencies, and increase demand for tangible assets like gold. Additionally, continued gold purchases by major emerging market central banks, the European Central Bank’s interest rate cuts, and increased gold holdings by global ETFs have all played a role in the price increase.
Market experts predict that the bullish trend in gold prices will continue. Major global investment banks, including JPMorgan, Goldman Sachs, and Citi, have set a gold price target of $3,000 per ounce for this year. KB Securities researcher Oh Jae-young commented, “Given the unpredictability of the Trump administration, the upward trend in gold prices as a safe-haven asset is likely to persist. While high prices may limit some upside potential, they are unlikely to reverse the overall trend.”
Conclusion
In conclusion, the surge in gold prices to record highs, coupled with a significant increase in trading volumes, reflects the growing demand for safe-haven assets amidst geopolitical tensions, economic uncertainties, and the U.S.-China tariff war. As investors continue to seek stability, driven by factors such as inflation concerns and central bank gold purchases, market experts forecast that gold prices could reach $3,000 per ounce this year. With major financial institutions backing this optimistic outlook, gold is expected to maintain its upward trajectory, solidifying its position as a key asset in uncertain times.
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