International gold prices have rebounded from their June lows, reviving demand for gold investments among South Korean retail investors. Gold banking balances, which had been declining since January this year, turned positive for the first time in seven months, with physical gold trading and gold bar sales also showing a synchronized recovery.

According to the financial sector on the 18th, gold banking balances at KB Kookmin, Shinhan, and Woori banks — the three institutions offering gold banking services — totaled 1.81 trillion won (approximately $1.3 billion) as of the 13th. That represents an increase of 78.1 billion won (4.5%) from 1.73 trillion won (approximately $1.2 billion) at the end of July. This marks the first month-over-month increase in gold banking balances since January of this year.

Gold banking balances had fallen sharply following the surge in gold prices earlier this year. Across the three banks, balances dropped from 2.44 trillion won (approximately $1.7 billion) at the end of January to 1.73 trillion won (approximately $1.2 billion) at the end of July — a decline of 716.1 billion won (29.3%). However, as gold prices passed their trough and began showing signs of a rebound, retail funds seeking to buy the dip started flowing back in.

Physical gold trading has also picked up. According to the Korea Exchange, retail investors have net purchased 133 billion won (approximately $94.3 million) worth of gold on the KRX Gold Market so far this month. Retail investors had been net sellers for three consecutive months since May before flipping to net buying this month. The KRX Gold Market is a spot market where gold can be traded in 1-gram units.

Gold bar sales are also recovering. The five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup) recorded gold bar sales of approximately 15.6 billion won (approximately $11.1 million) from the 1st to the 13th of this month. On a per-business-day basis, that averages about 1.73 billion won (approximately $1.2 million) per day — roughly 20% higher than July’s daily average of approximately 1.45 billion won (approximately $1.0 million). Cumulative sales from the start of the year through the 13th total approximately 359.4 billion won (approximately $254.7 million).

Gold Price Rebound and the Bank of Korea’s Return to Gold Buying

The recent revival in banking-sector gold investment demand is driven by the rebound in international gold prices. Spot gold hit an all-time high of $5,598 per ounce (approximately 7.9 million won) in January before falling below $4,000 (approximately 5.6 million won) in June. It has since recovered, reaching $4,417.24 per ounce (approximately 6.2 million won) on the 17th (local time) — up roughly 12% from the June low.

Easing concerns over additional U.S. interest rate hikes also played a role. As U.S. employment and inflation indicators softened, the likelihood of prolonged Federal Reserve tightening diminished, and the dollar weakened. This created a favorable environment for gold prices.

The Bank of Korea’s decision to resume physical gold purchases for the first time in 13 years — since 2013 — is also cited as a factor stimulating domestic gold investment sentiment. On the 3rd, the Bank of Korea established a cooperative framework to purchase domestically produced physical gold as part of its foreign exchange reserves. Additionally, it was confirmed that in the second quarter, the central bank newly acquired 679,765 shares of the gold exchange-traded fund (ETF) “SPDR Gold Shares,” listed on U.S. exchanges. The value of that holding at the end of Q2 was $250.41 million (approximately 350 billion won).

Banks Lower the Barrier to Gold Investing

Banks are also responding to the recovery in gold investment demand by improving product accessibility. KB Kookmin Bank will cut its gold bar sales margin by up to 1.0 percentage point starting next month. It has also added a 37.5-gram option to its product lineup, which was previously limited to 10g, 100g, and 1kg denominations, lowering the entry barrier for small-scale investors.

Woori Bank began brokering sales of 3.75g and 37.5g gold bars last month, further segmenting its product range. Hana Bank plans to launch a “Gold Gifting” service in the second half of this year, allowing customers to send physical gold as gifts through its messaging platform.

Son Jae-sung, a professor of accounting at Soongsil University, said, “With the stock market undergoing a correction and funds finding it difficult to move into real estate, we’re seeing money shift into safe-haven assets like gold and bonds.” He added, “The market appears to believe that even if there are further rate hikes, the room for additional increases is limited.”

“Gold has the potential to continue its upward trajectory over the medium to long term,” Son continued. “It’s not at a level where you’d deploy a lump sum all at once, but it has entered a price range where it’s certainly worth considering as an investment asset.”