Soaring Gold Prices Break Ceiling, Gold Funds and ETFs Also Achieve High Returns

Gold Fund Returns Reach 13.12% Year-to-Date,
Highest Among Thematic Funds
Capital Inflows Continue with 145.3 Billion KRW Since Start of Year
ETFs Also Strong; ACE KRX Gold Spot Up 20%
Gold Price Rally Expected to Last

As gold prices soar to unprecedented heights, the returns on gold funds and gold-related exchange-traded funds (ETFs) are also experiencing a strong upward trend. With forecasts suggesting that the gold price rally will continue until the end of this year, the strength of gold funds and related ETFs is expected to persist.

On the 11th, according to FnGuide, a financial information company, the 13 gold funds with assets under management of 1 billion KRW or more recorded a year-to-date return of 13.12% as of the 7th, the highest among 48 thematic funds classified by FnGuide. The high returns have continued to attract capital inflows, with 145.3 billion KRW flowing into gold funds since the beginning of the year.

Gold-related ETFs are also posting solid returns. As of the 10th, the ACE KRX Gold Spot ETF rose 20.13% year-to-date. This product, which tracks the 'KRX Gold Spot Index' announced by the Korea Exchange, surpassed 800 billion KRW in net asset value based on the closing price on the 4th. After first breaking the 700 billion KRW mark on the 23rd of last month with a net asset value of 700.7 billion KRW, it increased by more than 100 billion KRW in just four days. Additionally, the ACE Gold Futures Leverage (synthetic H) rose 19.06%, HANARO Global Gold Mining Companies 16.18%, KODEX Gold Futures (H) 9.74%, TIGER Gold and Silver Futures (H) 9.52%, and TIGER Gold Futures (H) 9.17% respectively.

The surge in gold prices to record highs has led to increased returns for gold funds and ETFs. On the 7th (local time), the April gold futures price traded on the New York Commodity Exchange (COMEX) reached $2,887.60 per ounce. Gold prices, which were around $2,600 at the end of last year, have steadily risen this year, recently breaking through the $2,900 mark during intraday trading, showing strong momentum. Hwang Byung-jin, a researcher at NH Investment & Securities, said, "Since the U.S. presidential election in November last year, precious metals sectors like gold and silver took a brief pause but have been on the rise again since early this year. Gold prices, which briefly dipped below $2,600 per ounce in the fourth quarter of last year, have surpassed $2,900, setting new all-time highs."

The rise in international gold prices has pushed domestic gold prices in South Korea to record levels as well. On the 10th, the price per gram of 1 kg gold spot in the Korea Exchange (KRX) gold market rose 4.95% from the previous day to 152,800 KRW, surpassing 150,000 KRW.

Although gold prices have reached record highs, the upward trend is expected to continue. Lee Young-hoon, a researcher at Samsung Securities, stated, "While gold prices are hitting all-time highs, the upward momentum can continue. Although the Trump administration's tariff policies may stimulate inflation and weaken expectations for interest rate cuts, concerns about the economy will drive a preference for safe-haven assets, which will not act as a bearish factor for precious metals."

The supply and demand environment is also expected to remain favorable. Lee added, "Central banks, especially in emerging markets, continue to be net buyers of gold, driven by efforts to strengthen independence from dollar hegemony and a preference for safe-haven assets, so this trend is likely to continue." He further noted, "The increase in gold holdings by ETFs is also linked to the decline in global real interest rates, and this growth trend is expected to persist."

Gold prices are forecasted to exceed $3,000 per ounce in the first half of this year. Researcher Hwang said, "Although market caution remains over the possibility of inflation reigniting with the dawn of the Trump 2.0 era, as long as the U.S. Federal Reserve (Fed) does not further retreat from its 'accommodative' monetary policy stance, gold prices could reach $3,000 per ounce within the first half of the year, and the rally surpassing $3,000 is expected to be prolonged through the end of the year."