Gold prices falter below 1 million won amid inflation fears and high U.S. rates

Gold prices are facing headwinds in their attempt to surpass the 1 million won per don threshold, currently trading at 949,000 won as of May 8. This stagnation comes despite geopolitical tensions in the Middle East, which typically drive demand for safe-haven assets like gold.

The primary factors limiting gold's ascent are persistent inflation concerns stemming from rising oil prices and the prospect of the U.S. maintaining its high interest rate policy for longer than anticipated. Higher interest rates reduce the attractiveness of non-yielding assets such as gold.

International spot gold prices also saw a slight decline, trading at $2323.79 per ounce. In contrast, other precious metals like platinum and silver showed more stable or slightly increasing trends.

Despite the downward pressure, central bank demand, notably from China, is providing crucial support. China's central bank has been on a continuous gold-buying spree for 19 consecutive months, increasing its holdings to 74.96 million ounces by the end of April. This sustained buying is seen as a key factor preventing a sharper fall in gold prices, as China diversifies away from U.S. assets.