Gold investment demand is declining sharply in South Korea as investors pivot toward traditional bank deposits, according to financial industry data released in August 2026. Data from major commercial lenders shows that gold-linked financial products and gold bar sales have dropped significantly from earlier in the year, while savings accounts and US dollar deposits have experienced inflows.
Gold Banking and Gold Bar Sales Drop Sharply
According to data from major commercial banks including KB Kookmin, Shinhan, and Woori Bank, total gold banking balances stood at 1,715,900,000,000 won at the end of July 2026, dropping 29.8% from 2,443,400,000,000 won in January, according to figures reported by Financial News. Monthly balances steadily fell from 2,352,200,000,000 won in February down to 1,837,000,000,000 won in June before reaching their lowest level of the year in July. New account creations also slowed dramatically, dropping from 4,310 new accounts in January to just 280 new accounts in July.
Physical gold sales mirrored this downward trend. Across five major commercial lenders—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—monthly gold bar sales plunged from 89,800,000,000 won in January to 32,200,000,000 won in May. Sales remained depressed at 32,700,000,000 won in June and 33,300,000,000 won in July, marking three consecutive months in the 300-billion-won range and cutting early-year sales volumes by roughly two-thirds, according to Financial News data.
While consumer demand for gold jewelry rose roughly 6% in the second quarter for traditional milestones like weddings, investment-grade products suffered from diminished short-term price expectations and a subsequent lack of fresh capital inflows.
Surge in Commercial Bank Deposits and Dollar Accounts
As retail investors pull capital out of bullion and gold accounts, bank deposits are absorbing the liquidity. Financial News reported that regular time deposit balances across the five major banks surged by 35,540,100,000,000 won in July, reaching 984,939,900,000,000 won. This marked the largest monthly increase for fixed deposits in three years and nine months.
Simultaneously, US dollar deposits expanded rapidly. Dollar deposit balances at the five major banks reached $70,830,000,000 at the end of July, increasing by $5,789,000,000 from the previous month to record the largest monthly jump of 2026. Foreign exchange market trends heavily influenced this shift; the won-dollar exchange rate closed at 1,424.0 won on July 31, falling 13.4 won from the prior session and marking the first time the rate hovered in the 1,420 range since late February.
A financial sector official cited by Financial News explained that corporations drove much of the dollar deposit expansion, moving quickly to secure foreign currency liquidity for import settlements amid a declining exchange rate environment.
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