Demand for gold through bank branches has remained strong even after prices pulled back from their peak. Banks that struggled with gold bar shortages during last year's price surge are now expanding their supplier networks and broadening their range of smaller bars to secure steady supply.
Combined gold bar sales at the five major banks — KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank and NH NongHyup Bank — totaled 29.1 billion won ($21.4 million) in September, according to financial industry data released Tuesday. That follows sales of 32.2 billion won in May, 32.7 billion won in June, 31.4 billion won in July and 33.5 billion won in August, keeping monthly sales near the 30 billion won mark for five consecutive months.
The recent pace is roughly four times the monthly average of about 8.5 billion won recorded at the five banks over the three years from 2022 to 2024, excluding last year's sharp price run-up. Banks believe buyers who expect further gains are continuing to purchase even as prices retreat from their highs.
Banks' efforts to widen their gold bar distribution networks reflect the supply shortages they experienced starting last year.
As gold prices surged last October, supplier inventories fell rapidly, leaving some banks unable to source bars in the weights customers wanted. NH NongHyup Bank suspended sales of smaller products and for a time handled only 100-gram and 1-kilogram bars. Shinhan Bank focused mainly on 37.5-gram bars during certain periods, while KB Kookmin Bank, Hana Bank and Woori Bank also concentrated on larger bars through early this year.
Supply conditions improved this year, but through April customers at KB Kookmin Bank, Shinhan Bank and Woori Bank could often only purchase the 1-kilogram bar. Banks repeatedly missed sales opportunities by failing to secure the smaller products that retail investors tend to favor when prices are rising.
Banks have recently moved to expand both their supplier base and the range of bar sizes they offer.
Hana Bank began handling sales and purchases of Samsung Gold Exchange bars on Sept. 29, adding them alongside its existing Korea Gold Exchange products. The Samsung Gold Exchange lineup covers four sizes — 3.75 grams, 10 grams, 37.5 grams and 100 grams. The addition of the 3.75-gram bar in particular gives customers who want to buy physical gold in smaller amounts a wider range of options.
KB Kookmin Bank resumed gold bar sales through its mobile app and internet banking on Sept. 10. Woori Bank added 3.75-gram and 37.5-gram Korea Gold Exchange bars in July, expanding its lineup to five products. Shinhan Bank added 112.5-gram, 375-gram and 500-gram bars in May, bringing its range to seven products.
Rather than relying on a single supplier or a narrow set of bar sizes as in the past, banks are diversifying their distribution and broadening their product ranges to prepare for potential shortages if gold prices rise again.
Investment in gold accounts as well as physical bars remains substantial.
The combined gold banking balance at KB Kookmin Bank, Shinhan Bank and Woori Bank rose from 1.93 trillion won at the end of last year to 2.44 trillion won at the end of January, then declined as gold prices corrected, finishing September at 1.67 trillion won.
That is more than 770 billion won below the January peak, but still 47 percent higher than the 1.14 trillion won recorded at the end of September last year. The figures suggest that demand to hold gold as an investment asset has grown compared with a year ago, even after prices retreated from their highs.
Gold banking allows customers to buy and sell gold through a bank account without physically storing bars. Because transactions can be made in small amounts and require no storage space, the product attracts a different pool of investors than physical gold does.
When gold prices rebounded in August, investment demand surged again. The five major banks' combined gold bar sales reached 82.96 billion won through Aug. 20, and gold banking balances also rose from the end of July. Short-term trading demand is flowing in and out quickly in response to price movements.
Banks are also broadening their gold-related product offerings beyond physical bars.
NH NongHyup Bank this month launched a physical gold trust product developed with Samsung Gold Exchange that allows customers to deposit gold bars, rings or other physical gold items, which the bank then manages to generate returns. The product will initially run as a pilot at select branches, with plans to expand to more locations next year.
Where gold investment at banks was previously concentrated in physical bar purchases and gold banking accounts, products that put customers' existing gold holdings to work have now entered the market as well.
The expansion of bank gold products appears to reflect both last year's shortage and the sustained investment demand that has followed. When prices surged, supply constraints limited sales; after prices eased, bargain-hunting demand persisted — giving banks a stronger incentive to build stable supply chains.
Competition among banks has broadened beyond simple gold bar sales to encompass supplier diversification, smaller bar formats, digital sales channels and a wider range of gold-linked financial products.
rainbow@heraldcorp.com
