ANN/KOREA HERALD – A sharp surge in demand for gold has raised the “kimchi premium” on the price of the safe-haven asset, driving the gap between gold prices in South Korea and international markets to over 20 per cent.
While the term “kimchi premium” has been mostly used recently to refer to price gaps in cryptocurrencies, now even gold has become subject to the phenomenon, as local investors flock to the asset to hedge against fears of trade wars and geopolitical uncertainty sparked by United States (US) President Donald Trump.
The spot price of a one-kilogramme gold bar stood at KRW168,200 (USD117) per gramme at around 1pm on Friday on the KRX Gold Market. The Korea Exchange operates the gold bourse, where the precious metal is traded like an equity.
At the same time, the LBMA Gold Fixing price, operated by the London Bullion Market Association, was KRW135,000 per gramme, showing a price gap of over 24 per cent. The KRX uses the price offered by the LBMA, the leading authority on gold and silver markets, as its indicator of the international price of gold. The price of spot gold on the KRX Gold Market closed trading at KRW158,000 yesterday, down 3.4 per cent from the previous trading day and reducing the price gap slightly to around 18 per cent.
Friday’s surge marked the first time for the price discrepancy to widen beyond 20 per cent since the KRX Gold market was first launched in 2014.
The KRX issues an alert about the price gap when it widens to over six per cent, and the warning has been issued every day since February 4.
