Gold Fund Returns Soar as Gold Prices Surge

Gold Prices Surge Amid Inflation Concerns
12 Weekly Returns at 5.5%
Highest Among 46 Thematic Funds

[Asia Economy Reporter Song Hwajeong] Recently, as concerns over inflation have caused gold prices, considered a representative safe-haven asset, to rise sharply, the returns of gold funds have also been soaring.

According to financial information firm FnGuide on the 17th, the one-week return of 12 gold funds with assets under management of over 1 billion KRW as of the 15th recorded 5.5%. This is the highest return among 46 thematic funds. The atmosphere has changed drastically since the end of September. At the end of September, the weekly return of gold funds was only -0.72%, and it fell 10.23% compared to the beginning of the year, showing the only double-digit decline among thematic funds. However, due to the recent upward trend, the year-to-date return has narrowed to -2.33%.

This turnaround was possible thanks to the rising gold prices. On the 16th (local time) at the New York Mercantile Exchange (NYMEX), gold prices fell 0.67% to $1,853.60 per troy ounce. Although there has been weakness this week due to profit-taking after last week's sharp rise, prices have increased nearly 4% since the beginning of this month.

Inflation concerns have driven gold prices up. On the 10th, the U.S. Consumer Price Index (CPI) for October rose 6.2% year-on-year, marking the highest increase since December 1990, which gave momentum to the rise in gold prices. The Wall Street Journal (WSJ) analyzed, "Gold prices, which had been relatively stable since June, began to rise from last week when the October CPI was announced, due to investors' concerns that inflation may not be temporarily over as the U.S. Federal Reserve (Fed) expected," adding, "These concerns have pushed gold prices to their highest level in five months." Kim Sohyun, a researcher at Daishin Securities, said, "In the short term, investment in commodities for inflation hedging seems promising. Recently, gold prices have risen 4% compared to the beginning of the month, and speculative net buying positions have increased for five consecutive weeks," adding, "It appears that inflation hedge funds have flowed into precious metals overall, including gold."

On the other hand, there are also forecasts that the precious metals rebound will be short-lived. Hwang Byungjin, a researcher at NH Investment & Securities, explained, "Next year, the rise in nominal interest rates due to the normalization of real interest rates will remain a burden on precious metals, which are representative safe-haven and inflation hedge assets," adding, "In particular, noise surrounding base rate hikes is expected to trigger a rise in real interest rates in the first half of the year, making a strategy to reduce the weighting of the precious metals sector, which has entered a long-term bearish cycle, effective."

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