Editor’s Note
This article discusses the recent surge in gold and silver prices, driven by geopolitical tensions and their status as safe-haven assets. The views expressed are based on current market analysis.
Spot gold prices have been on a steady rise, surpassing $4,300 per ounce on the 2nd and recently soaring to $4,420. Silver price movements have also accelerated. Both gold and silver are already trading at historically high levels, and with the addition of geopolitical risks, additional buying pressure has emerged. However, this trend cannot be attributed solely to the Venezuela situation. The backdrop includes the U.S. Federal Reserve’s interest rate cuts, the likelihood that this easing trend will continue for some time, and the trend of central banks around the world steadily purchasing gold. These factors intertwine, making gold and silver relatively more attractive. The market largely expects gold and silver prices to continue their volatility at high levels for the time being.
According to the International Diamond Exchange price index, diamond prices have fallen more than 45% compared to their peak in 2022, effectively halving over the past three years. The primary reason is seen as a decrease in demand. The key consumer market, China, has contracted due to an economic slowdown, and diamond purchases have declined across global consumption overall. Additionally, the rapid establishment of lab-grown diamonds as a substitute is cited as a decisive factor. Lab-grown diamonds are structurally almost identical to natural diamonds but cost only about one-tenth. Analysis suggests that demand is shifting rapidly, especially among younger generations who increasingly prioritize cost-effectiveness.
The stock market has been hot since the new year. The KOSPI broke its all-time high for three consecutive trading days after the New Year’s opening. The KOSPI surpassed the 4,400 level for the first time in just two days of the new year, with a daily gain exceeding 3%, showing record strength. Today, it further expanded its gains in the afternoon and broke through the 4,500 level, setting another all-time high. The biggest driver of the KOSPI’s rally in the preceding two days was foreign buying. Foreign investors led the index rise with net purchases exceeding 2.8 trillion won over two days, concentrated in semiconductor stocks. Samsung Electronics surged over 7% in a single day, entering the 130,000 won range for the first time ever, and SK Hynix also touched 700,000 won during the session, both setting new highs.
While the KOSPI broke all-time highs for two consecutive days, retail investors net sold nearly 2 trillion won worth of stocks and instead bought U.S. stocks in large quantities. Looking at ETF trading, U.S. equity ETFs topped the net buying list, and products betting on a KOSPI decline (inverse products) were also heavily purchased. This was interpreted as a signal that distrust in the domestic market has not yet been fully resolved. However, looking at today alone, retail investors showed a buying advantage. This is interpreted not as a complete reversal of the two-day selling trend, but as an approach considering both profit-taking and the possibility of short-term adjustments.