Gold prices: Reasons to watch for volatility in the second half after a strong first half

This year’s gold prices are showing a remarkable upward trend. As of July, the domestic gold price is 635,000 won per 3.75g of 1 don(, representing an approximately 43% increase from 443,000 won during the same period last year. The international spot gold price is about $3,337 per ounce, up 27% since the beginning of the year and 39% compared to one year ago. Amid this steep rise, investor interest in gold price forecasts is increasing.

How far will the gold price upward trend go?

The spot gold price has continued a steady rise until May, but recently, the pace of increase has somewhat slowed. However, no significant downward signals have been observed yet, and it is generally expected that the current high price levels will be maintained.

Financial experts have mixed opinions on the outlook. JP Morgan, in its latest report, set a year-end target of $3,675 per ounce for gold, indicating about a 10% potential increase from current levels. Goldman Sachs and Citigroup have targeted around $3,000 per ounce, which already exceeds current prices significantly. Meanwhile, some institutions are more conservative, mentioning the possibility of price adjustments by the end of the year.

Major variables influencing gold prices

Deepening Dollar Decoupling

Moves to reduce dependence on the dollar in international trade are accelerating. China is promoting the internationalization of the yuan, diversifying trade settlement currencies, while countries like Russia and Iran are increasing gold holdings to avoid the dollar. As the global influence of the dollar weakens, demand for gold as a store of value is expected to rise.

Geopolitical Uncertainty

Ongoing risks such as US-China trade conflicts, the Russia-Ukraine war, and instability in the Middle East are accumulating. Gold, as a traditional safe-haven asset, tends to attract more investor funds as these uncertainties increase.

Concerns over Economic Weakness in Developed Countries

There are concerns about inflationary pressures in the US and potential growth slowdown in Europe. As economic instability grows, the role of gold as an inflation hedge becomes more prominent.

Interest Rate Cut Cycle

Central bank rate cuts lower the opportunity cost of holding gold. As seen after the Fed’s 50 basis point cut in September last year, gold prices surged, and further rate cuts are likely to drive gold upward.

Considerations for investors in the remaining period

During the rest of this year, gold prices are likely to fluctuate at high levels. Short-term corrections may occur, so proper risk management is essential. While long-term support for gold is expected due to increasing global uncertainties, investors should also manage their positions to prepare for short-term volatility.