Gold prices in South Korea have climbed following the death of North Korean leader Kim Jong-il as worries over heightened geopolitical uncertainties and a strengthening greenback prompted investors to stack up the safe-haven asset, data showed Wednesday.
The retail price of 1 don of pure gold in South Korea stood at 238,000 won (US$ 205.99) as of Tuesday, rising the most in five days since 241,000 won on Dec. 14, according to the Korea Gold Exchange. The don (3.75 grams) is a Korean unit used to measure gold.
Gold prices in South Korea have trended higher following previous North Korean events, such as military scuffles and attacks.
Last year, the price for the precious metal jumped 1,100 won to 168,850 won after the North torpedoed the South Korean warship Cheonan. Gold prices surged 5,500 won to 209,000 after the communist regime shelled Yeonpyeong Island near the Yellow Sea border.
Analysts said a rise in the U.S. dollar following Kim’s death was the biggest booster for gold price gains.
On Monday, the local currency closed at 1,174.8 won against the greenback, down 16.2 won from the previous close.
“Domestic gold price, which tracks global price, tends to rise when the greenback gains,” said Jun Min-kyu, an analyst at Korea Investment & Securities Co.
Others said investors’ nervous sentiment was another factor that prompted them to snap up the precious metal.
However, most analysts downplayed the impact North Korean risks will have on future gold prices, citing a stabilizing Korean won and South Korea’s small portion in the global gold market.
“It seems the developments over the eurozone debt crisis is a more critical issue than North Korea for gold price,” said Jun.