Gold prices parallel stock rise, signals shift from defensive to investment asset

Gold products are displayed at a jewelry shop in Jongno District, central Seoul, on Feb. 4, as gold and silver prices rebound after a sharp drop. [NEWS1]

 
Gold has traditionally been seen as a safe-haven asset — something investors stockpile when stocks fall. Recently, however, an unfamiliar picture has emerged, with both stock prices and gold prices rising in tandem. Some analysts say this signals a shift in gold’s role from a defensive asset to a full-fledged investment asset.
 
According to Investing.com, gold futures traded roughly at $5,000 per troy ounce on Friday. Prices dipped briefly after Kevin Warsh, known for his hawkish stance on monetary tightening, was nominated on Jan. 30 as the next chair of the U.S. Federal Reserve, but quickly rebounded and have since continued climbing. 
 

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What stands out is that gold and equities are rising side by side. Gold prices surged 64 percent last year and are up nearly 15 percent so far this year. Korea’s benchmark Kospi jumped 75.6 percent in 2025 and has gained 25.7 percent this year. This breaks with the long-standing pattern in which gold rises when stocks fall.
 
 
Too much money in the market


Analysts point to excess liquidity — too much money sloshing around global markets — as a key driver behind the unusual rally in both asset classes.
 
According to the Posco Research Institute, the correlation between gold prices and the S&P 500 rose sharply from 0.02 in 2021 to 0.77 last year.
 
“Traditionally, gold has shown a negative correlation with risk assets such as equities, acting as a defensive buffer during economic downturns,” said Kim Young-sam, a senior researcher at the institute. “But recently, it has increasingly moved in tandem with stocks and other risk assets.”
 
Last year, major economies — including Korea, the United States, Japan and China — pursued expansionary fiscal policies, significantly increasing market liquidity. That money, analysts say, has been pushing up prices across the board, regardless of asset class. According to Bloomberg, global broad money, or M2, grew 10.8 percent last year.
 

People pass by an electronic sign advertising gold purchases lit at a shop in Jongno District, central Seoul, on April 14, 2025. [NEWS1]

 
Losing faith in the dollar


Aggressive gold buying by emerging-market central banks since the Russia-Ukraine war has also played a major role.
 
According to the World Gold Council, the top five central banks that increased gold purchases between 2022 and last year were China, Poland, Turkey, India and Azerbaijan — all emerging economies. The trend reflects concerns that dollar-denominated assets could be frozen in the event of political or geopolitical disputes, following the precedent set when the United States removed Russia from the Society for Worldwide Interbank Financial Telecommunication, or Swift, international banking system in 2022.
 
As a result, central banks have become major price drivers in the gold market. Unlike in the past — when they tended to sell or slow purchases as prices rose — central banks are now steadily increasing their gold reserves.
 
China’s central bank held 74.19 million ounces of gold as of the end of last month, worth $369.58 billion, up $50.13 billion in just one month.
 

A staff member organizes gold products at a wholesale jewelry shop in Jongno District, central Seoul, on Feb. 16, 2025. [NEWS1]

 
No longer just a safe haven


Gold itself is also increasingly being treated as an investment asset. The launch of numerous gold-backed exchange-traded funds (ETF) has drawn large inflows of capital.
 
According to the World Gold Council, asset managers held 4,025 metric tons of gold for ETFs last year, up 801 tons from a year earlier. In value terms, ETF-linked gold holdings increased by $89 billion last year alone.
 
China has been a major driver of retail demand as well. The Wall Street Journal reported on Feb. 8 that individual Chinese investors were behind much of the recent surge in precious metals, dubbing them “auntie” investors. Chinese buyers purchased about 432 tons of gold bars and coins last year, a 28 percent jump from 2024, accounting for roughly one-third of global retail gold demand.
 
Experts warn that as gold takes on more characteristics of a risk asset, its price volatility could increase.
 
“As gold becomes more synchronized with equities, investors should be cautious about assuming it will always act as a reliable hedge during market crises,” Kim said.
 
Choi Jin-young, a researcher at Daishin Securities, said the trend could also signal the start of a broader commodities supercycle.
 
“Speculative demand is rising,” Choi said. “We may see investment rotation from precious metals into base metals such as copper and nickel.”


This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY JANG SEO-YUN [shin.minhee@joongang.co.kr]