The prices of both gold and Bitcoin have reached all-time highs in the Korean market, driven by heightened anticipation of interest rate cuts by the U.S. Federal Reserve in June.
In the Korean market, the price of one gram of gold reached 89,110 won ($66.78) at Monday’s closing, marking a 2.2 percent increase from the previous trading session. This closing price set a record high, not surpassed in the 10 years since the national bourse operator’s gold market began operating in 2014. The bullish trend of gold extends overseas as well, with London’s gold price benchmark hitting an all-time high of $2,083.15 per troy ounce on Monday, surpassing the previous record set at the end of last year.
Market experts attribute the rise in the price of gold to its status as a safe-haven asset, closely linked to interest rates. Lower interest rates typically lead to a weaker dollar, increasing the investment appeal of gold. With more investors, both domestic and international, anticipating a rate cut by the Fed in June, the value of gold is on an upward trend.
According to Choi Jin-young, a researcher at Daishin Securities, the recent uptrend in gold prices suggests that the Fed may be nearing the end of its interest rate hike cycle. This outlook bodes well for gold’s future prices, given its inverse correlation with real interest rates. Choi forecasts that the upper limit of gold prices in the second half of this year could reach $2,150 per troy ounce.
Furthermore, Chun Kyu-yeon from Hana Securities highlights increased geopolitical tensions in the Middle East as another factor contributing to the heightened preference for safe-haven assets like gold.
Bitcoin has also been experiencing bullish momentum in the Korean market, surpassing its previous all-time highs.
At major coin exchanges in Korea, such as Upbit and Bithumb, Bitcoin prices reached 97 million won earlier on Tuesday, establishing a new record high. Since setting a new record on Feb. 28, surpassing the previous high of 82 million won set in November 2021, Bitcoin has sustained its upward trajectory.
The strength of Bitcoin’s performance can be attributed to several factors. Firstly, the influx of significant institutional funds following the approval of Bitcoin ETFs has bolstered investor confidence in the cryptocurrency. Additionally, there is anticipation surrounding the upcoming halving of mining rewards, which occurs approximately every four years. This event leads to a reduction in the supply of new Bitcoins, contributing to the scarcity and perceived value of the digital asset.