Cryptocurrency Crash... "To Gold, To Gold"

Inflation Hedge Demand Shifts Market
KRX Gold Market Price at 68,520 KRW per Gram
Rises 7% This Month, Rebounds

[Asia Economy Reporter Minji Lee] As the prices of cryptocurrencies, once spotlighted as digital alternative assets, have plummeted, demand for inflation hedging has shifted to gold. International gold prices have surged by 6% this month, sharply contrasting with cryptocurrencies' 32% drop within a week.

According to the Korea Exchange on the 25th, the price per gram of 1kg gold spot in the KRX Gold Market was traded at 68,520 KRW as of the previous day. Gold prices, which had risen to 69,230 KRW earlier this year, showed a downward trend and fell to 62,000 KRW in March but rebounded with a 7% increase this month.

Gold traded in the international market is also increasing in value. As of 9:20 AM that day, June gold futures on the New York Commodity Exchange (COMEX) were priced at $1,877.50 per troy ounce, marking a 9% rise since last month. Amid heightened hedge demand due to inflation concerns and the Chinese government's strong regulations on cryptocurrencies, the number of investors turning to gold has increased.

Earlier this year, during the inflationary phase, demand for using cryptocurrencies as a hedging tool expanded, causing gold to be relatively neglected by investors. This was because investors who had traditionally defended against the risk of money losing value through representative safe assets like gold and bonds flocked to cryptocurrencies. However, with China's cryptocurrency trading regulations and the emergence of price bubble concerns, investor withdrawal from the market is accelerating. Park Okhee, a researcher at IBK Investment & Securities, explained, "With Bitcoin's decline, risk asset caution has expanded, leading to continuous net inflows into gold," adding, "This reflects anxiety over risk asset investments and demand for inflation hedging."

The rebound in gold prices has also driven up returns on related derivative products. Since last month, the ‘KODEX Gold Futures’ exchange-traded fund (ETF) has risen about 9.9%. The ‘KINDEX Gold Futures Leverage,’ which seeks twice the return of gold price increases, rose 21% during the same period. As returns have trended upward, funds are flowing into products that allow investment in gold. Individual investors purchased 3.9 billion KRW worth of ‘KODEX Gold Futures’ over the past five trading days, and funds are also flowing into products such as ‘Samsung Leverage Gold Futures’ and ‘Samsung KRX Gold Spot ETN.’

This content was produced with the assistance of AI translation services.