South Korea’s benchmark stock index, the KOSPI, surged to a new all-time high on Wednesday, closing firmly in the 4,080-point range. The rally was driven by strong performances in US tech shares and record earnings from SK Hynix, coupled with growing optimism over international trade agreements.
However, this “risk-on” sentiment, which propelled equities, had the opposite effect on commodities, as the price of gold tumbled below the $4,000 mark amid waning demand for safe-haven assets.
Tech and Trade Hopes Propel Market
The KOSPI finished the session at 4,081.15, a significant gain of 70.74 points (1.76%) from the previous close. This shattered the previous closing record of 4,042.83 set on October 27. The index also established a new intraday high, briefly touching 4,084.09.
The market rally was fuelled by several factors. Positive momentum from Wall Street, where NVIDIA’s CEO affirmed strong demand for AI chips and all three major US indices hit record highs, provided a strong opening.
This was bolstered by domestic news, as SK Hynix posted its largest-ever third-quarter earnings. The chipmaker’s shares soared 7.10%, hitting a new record price of £297.39 during trading. Industry giant Samsung Electronics also benefited, with its shares rising 1.01% to reclaim the £53.20 level.
Trump Comments Boost Sentiment
Market sentiment was further buoyed by comments from US President Donald Trump. Speaking at the APEC CEO Summit in Gyeongju, Mr. Trump stated he expects to “finalize the trade agreement with Korea soon.”
He also expressed optimism regarding the upcoming US-China summit with President Xi Jinping on October 30, stating, “I hope we can make a deal. I think we will make a deal. It will be a good deal for both parties.”
These remarks helped alleviate investor caution, which had been present earlier in the day ahead of the US-South Korea summit and the US Federal Open Market Committee (FOMC) interest rate decision. The comments spurred buying in sectors linked to US-Korea cooperation, including nuclear power (Doosan Enerbility, +11.57%) and shipbuilding (HD Hyundai Heavy Industries and Hanwha Ocean).
Investor Flows and Currency Movements
The day’s gains were led by institutional investors, who purchased a net £340.8 million. Conversely, retail investors sold £192.2 million, and foreign investors continued their sell-off, shedding £118.4 million. This followed a massive £851.2 million net sale by foreigners the previous day, which had been the largest since April amid tariff concerns.
Despite the index hitting a new high, market breadth was negative, with 566 stocks declining and only 305 advancing. The KOSDAQ index also diverged, finishing 0.19% lower at 901.59.
In the foreign exchange market, the Korean won strengthened against the US dollar, closing at ₩1,431.7, a drop of ₩6.0.
Gold Plummets on Trade Optimism
The same optimism that lifted stocks applied downward pressure on gold. With trade tensions appearing to ease, demand for safe-haven assets weakened, sending the precious metal into a correction.
On October 27, spot gold prices fell 3.4% to $3,980 an ounce, dipping below the $4,000 threshold. The price has continued to slide, sitting at $3,931.60 during recent trading. This marks a significant reversal from its all-time high of $4,381, reached just over a week ago on October 20. Despite the drop, gold remains up more than 50% year-to-date.
Analysts Divided on Gold’s Outlook
Short-term analysts suggest the correction was overdue. Ole Hansen of Saxo Bank remarked that gold is undergoing a “long-overdue correction” spurred by the US-China trade optimism, suggesting the high for the year may already be in.
Citigroup analysts forecast the decline could continue for several weeks, setting a three-month price target of $3,800. John Reade of the World Gold Council noted that central bank demand is “not as strong as it used to be” and that some in the market see $3,500 as a “healthy price.”
However, the long-term outlook remains bullish. Major banks, including HSBC, Bank of America, and Societe Generale, are maintaining forecasts for gold to reach $5,000 next year. Ruth Crowell, CEO of the London Bullion Market Association (LBMA), stated that gold is on a “solid upward trajectory” and is becoming a mainstream asset for investors, calling the recent surge in global trading volumes “the start of a new chapter, not a temporary phenomenon.”
