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Domestic physical gold prices, which had been marked by a “Kimchi Premium,” have rapidly normalized, leading to a sharp decline in gold prices. According to the Korea Exchange (KRX), as of the 28th of last month, the per-gram closing price for 1kg of 99.99% gold in the KRX gold market dropped 14.98% over two weeks—from KRW 163,530 recorded on the 14th to KRW 139,030. In contrast, international gold prices fell only 0.95% during the same period, suggesting that the steep drop in domestic gold prices was a result of an excessive premium adjustment.

On the 14th, the divergence between domestic gold prices and international prices reached an intraday peak of 24% and a closing divergence of 20.13%, but these gaps quickly shrank as investors shifted toward gold futures and international gold spot markets. Experts believe that while global central banks are likely to continue increasing their gold purchases and safe asset demand will persist amid ongoing trade disputes, the process of normalizing the excessive domestic premium may lead to increased volatility. For investors wishing to gain exposure to gold at international prices domestically, alternatives such as gold banking products (from banks like KB, Woori, Shinhan) and S&P Gold ETFs are available, though these options come with additional fees and tax burdens.

Gold is widely regarded as a safe asset; however, its price is prone to decline when wars or market uncertainties subside. While gold tends to rise during periods of heightened geopolitical and financial market uncertainty, it faces downward pressure during phases of economic normalization. From a strategic asset allocation perspective, maintaining a 5–10% allocation of the overall portfolio in gold may be effective for risk hedging. Moreover, if gold prices experience further adjustments, adopting a dollar-cost averaging strategy for long-term investment is advisable.