Precious Gold... Bank Gold Banking Balance Soars by 40%

As international gold prices surge, the balance of gold banking (gold accounts) in the banking sector is also increasing significantly. However, experts recommend using gold as one of the means in an asset management portfolio, given the difficulty in predicting future gold price trends.

According to the financial sector on the 23rd, the gold banking balance of KB Kookmin, Shinhan, and Woori Banks, which handle gold accounts, was recorded at 721.3 billion KRW as of the 21st. This represents a 7.67% increase compared to the end of last month (669.9 billion KRW) and a 39.33% increase compared to the end of last year (517.7 billion KRW).

The background for the increase in gold banking balances is the rally in gold prices. According to Woori Bank, the international gold price was $2,731.86 per troy ounce (T.oz = 31.1g) as of the 21st. This is a 31.48% increase compared to the end of last year ($2,077.72).

The reason why gold prices continue to rise despite being evaluated as a 'historical high' is attributed to uncertain global conditions. The United States is approaching the presidential election in November this year, and wars in the Middle East (Israel-Iran) and Europe (Ukraine-Russia) are intensifying or continuing. Central banks around the world are also securing gold instead of the dollar to respond to uncertainties, which is cited as one of the causes.

As gold prices continue to rise, the gold banking balance is also maintaining an upward trend. The gold banking balance of the three banks was 514.6 billion KRW in February when gold prices were stagnant, but as gold prices rose, it surpassed 600 billion KRW in July and exceeded 700 billion KRW this month. The number of financial consumers interested in bank gold banking is also increasing. The number of gold banking accounts at the three domestic banks handling gold accounts was 265,602 as of the 21st, a 5.84% increase compared to the end of last year (250,945 accounts).

However, experts recommend approaching gold investment from the perspective of 'asset allocation.' This is because it is difficult to predict how global political situations such as the upcoming U.S. presidential election in November, Israel-Iran, and Ukraine-Russia will unfold, and it is uncertain whether central banks will engage in a gold acquisition race.

Jung Sung-jin, Deputy Head of KB Kookmin Bank Gangnam Star PB Center, said, "In the case of gold, demand as a precious metal is less influential than the buying trends of central banks and industrial demand, and these trends can only be confirmed retrospectively." He added, "Since it is difficult to predict how gold prices will move, it seems appropriate to approach gold as one of various asset management tools, just like other assets."