South Korean Retail Investors Turn Net Buyers of Gold for First Time in Four Months

South Korean retail investors turned net buyers of gold for the first time in four months, as investors watched whether the metal's recent rebound can continue.

Retail investors bought a net 133 billion won ($96.4 million) on the KRX gold market from the start of August through Aug. 14, according to the Korea Exchange.

They had been net sellers for three straight months since May. Monthly sales totaled 125 billion won ($90.6 million) in May, 348 billion won ($252.3 million) in June and 51 billion won ($37.0 million) in July.

The return to net buying appears to reflect a recent rebound in international gold prices after a period of declines. Weaker US employment data, buying by central banks and uncertainty over artificial intelligence investment have been cited as drivers of the recovery.

Retail demand has also flowed into gold exchange-traded funds. From the start of August through Aug. 14, retail investors bought a net 37 billion won ($26.8 million) of the ACE KRX Gold Spot ETF and 14 billion won ($10.1 million) of the TIGER KRX Gold Spot ETF, Korea Exchange data showed.

"For the time being, gold prices are likely to fluctuate in line with the direction of real interest rates and the dollar," Jeong Hyun-jong, an analyst at Korea Investment & Securities, said. If high interest rates persist and real rates rebound, short-term volatility in gold could increase, he added.

Still, a sharp collapse on the scale seen in the past is unlikely because of structural factors such as central-bank buying, Jeong said.

He added that gold has room to rise gradually if the US enters a phase of falling real interest rates, driven by an economic slowdown and benchmark rate cuts in the second half of this year and early next year.

Lee Su, Hankyung.com reporter 2su@hankyung.com