As international gold prices break all-time highs, individual investors are buying gold-related exchange-traded funds (ETFs). Asset managers have also cut management fees to compete for investors.
According to Koscom Check on the 26th, over the past week (Sept. 18–25), individual investors made net purchases of 58.7 billion won of Korea Investment Management's "ACE KRX Gold Spot" and 46.4 billion won of Mirae Asset Global Investments' "TIGER KRX Gold Spot," respectively. During this period, the two ETFs ranked No. 4 and No. 7 in individual net purchases.
Over the week, individuals also net bought ETFs that invest in gold futures, including ▲KODEX Gold Futures (H) (5.7 billion won), ▲TIGER Gold Futures (H) (3.4 billion won), and ▲ACE Gold Futures Leverage (Synthetic H) (1 billion won), as well as the ETF that invests in gold mining corporations, "HANARO Global Gold Mining Corporations" (2.6 billion won).
Gold prices were strong from the start of the year through the end of April. As uncertainty grew due to U.S. President Donald Trump's tariff policy, demand for safe assets also increased. But after risk appetite revived, prices stalled before surging again this month to break through an all-time high of $3,800 per ounce.
The biggest recent driver of the jump in gold prices is the U.S. Central Bank, the Federal Reserve (Fed), cutting its benchmark interest rate. Generally, when the United States lowers rates, liquidity expands in the market, triggering an "everything rally" in which stocks, real estate, and commodity prices rise. In addition, because gold has an alternative relationship with the dollar, when rate cuts lower the value of the dollar, gold tends to move in the opposite direction.
In addition, the fact that major countries' Central Banks increased their gold purchases supported the rise in gold prices. That is because geopolitical risks intensified with the war between Russia and Ukraine since 2022 and the Israel-Hamas conflict. In particular, after Russia invaded Ukraine and dollar assets were frozen, preference for gold grew, especially among emerging markets. According to the World Gold Council (WGC), global gold demand last year totaled 4,974 tons (t), an all-time high.
On expectations that the United States could cut rates two more times within the year, there are projections that gold prices will continue to rise. NH Investment & Securities set a 12-month gold price target of $4,000 per ounce. Hwang Byung-jin, a researcher at NH Investment & Securities, said, "As ETF-centered investment and Central Banks' diversification of foreign exchange reserves lead to gold purchases, interest in the precious metals sector will grow in the fourth quarter," adding, "In the short term, a 'overweight' strategy for gold investment is valid."
Global investment banks (IBs) also expect gold prices to keep rising. JPMorgan projected that by the end of 2026, gold would climb to $4,250 per ounce. Goldman Sachs went further, analyzing that "if investors partially adjust their allocation to U.S. Treasurys in favor of gold, gold prices could reach $5,000 per ounce."
As the likelihood grows that gold prices will stay favorable for the time being, asset managers have moved to cut management fees to attract investor demand.
Korea Investment Management in Jul. cut the fee on its ACE KRX Gold Spot under management to 0.19% from 0.50%, more than halving it. NH Amundi Asset Management also lowered the total fee on the HANARO Global Gold Mining Corporations ETF to 0.15% from 0.45% on the 2nd. NH Amundi said it decided to cut fees to reduce investors' expense burden and improve long-term investment efficiency.
However, gold does not play the role of a safe asset as much as expected. When the New York stock market plunged in early 2020 due to the shock of COVID-19, global hedge funds sold gold to secure cash in preparation for margin calls (requests for additional collateral), sending international gold prices plunging from the $1,700-per-ounce level to the $1,400 range. Also, immediately after President Trump announced reciprocal tariffs in April this year, when the Nasdaq index plunged more than 11% over three trading days, gold prices fell by nearly 6%.