The price of gold, a favorite safe-haven asset worldwide, has been soaring recently, prompting consumers to consider selling their gold. However, demand has slowed down due to the high price.
International gold futures prices, which began surging early last month, reached a record high of $2,327 per ounce on April 8, marking another record high.
According to industry experts, more Korean-American families in Koreatown are cashing in their gold bars, 14K gold, and solid gold rings as high prices and economic downturns have tightened their belts.
“The number of customers looking to sell gold has significantly increased, reflecting the poor economy in LA Koreatown,” said Michael Kim, CEO of Gold Pig. “There are quite a few cases of elderly people bringing in their gold rings,” another vendor added.
It is a Korean tradition to gift babies a gold ring on their first birthdays from their parents’ relatives or close friends (usually weighing 3.75g of gold). However, demand for these rings and gold bars has faded as prices soared. For instance, the price of a 3.75g gold ring exceeds $300, while a one-ounce gold bar costs more than $2,480.
According to Korean-American jewelry shops, with international gold futures prices above $2,300 per ounce, the retail price of a one-ounce gold bar ranges from $2,480 to $2,700.
For Korean Americans, the price of a baby’s birthday ring, a gauge of gold prices, is at an all-time high, surpassing $300.
“A month ago, we were selling a stone ring for $270 to $280 per piece, and now it’s over $300,” said John Kim, CEO of Bogumsa Jewelry. “If you are looking to give a gold ring as a gift for a baby, you should budget at least $190 for a half-weight (1.875g) ring and $305 to $350 for a full-weight (3.75g) ring,” added another.
With gold prices at record highs, purchases of gold bars by Korean-Americans, which were booming last year, have slowed.
“Until last year, we had many customers buying gold bars for investment, but this year, the price of gold has risen so much that we’ve seen a decline in the number of investment customers,” said David Heo, owner of Great Kings Jewelry.
However, demand for gold bracelets and chain necklaces made of gold from young customers has remained steady, he added.
“They are purchasing gold bracelets and chain necklaces ranging from $500 to $600 up to $10,000,” Heo said. “For some younger generation customers, gold is popular because they see it as a safe asset and valuable jewelry to show off.”
While the jewelry industry attributes the rally to factors such as geopolitical tensions and increased demand from central banks and large financial institutions, including China, it is challenging to identify a single major factor.
However, this has led to a wide range of predictions for the rally, with some suggesting that the price could rise by as much as 30%.
According to Business Insider, economist David Rosenberg, president of Rosenberg Research, predicted that the Fed’s interest rate cut will push the price of gold to $3,000 per ounce in the coming months.
“The current gold rally has transcended the typical macroeconomic issues of a strong dollar and falling inflation expectations,” he said, adding that “gold prices will rise in both scenarios for the U.S. economy in a soft landing or a typical bear market.”
BY EUNYOUNG LEE, JAESUN SUH, HOONSIK WOO
[lee.eunyoung6@koreadaily.com, suh.jaesun@koreadaily.com]
