OCBC, UOB see surge in gold investments as glint catches eye of younger investors
The number of such investors is growing, as is the proportion of gold in their assets under management
- Gold up 16 per cent in the year to date
- OCBC: One in six of all digital investments are in precious metals
- UOB: Younger investors allocating more AUM to gold
YOUNGER retail investors in Singapore are turning to gold as an affordable investment in times of uncertainty, market players have said. In particular, the younger crowd are also looking at digital gold investments.
Spot gold prices have held steady at higher end of US$2,300 per ounce in June, before surging above the US$2,400 mark on Thursday (Jul 12). Prices hit US$2,401.37 per ounce as at 7.20 pm (Singapore time) on Friday.
Prices are up more than 16 per cent in the year to date.
OCBC, which launched its digital service on gold purchase on its banking app in October 2021, has seen demand surge for its precious metal investments.
“Gold and silver are among the most popular digital investments, making up one in six of all digital investments made by OCBC customers,” the bank told The Business Times.
It added that the investments into gold, one of the fastest-growing investment asset classes, more than doubled in the second quarter of 2024 from the fourth quarter of 2023. Over the same period, gold prices rose about 13 per cent.
Growth drivers
The average number of gold investors jumped 80 per cent quarter on quarter in Q2, with the younger crowd driving the growth, OCBC noted.
Surprisingly, while gold is often associated with older investors – about 70 per cent of its gold investors are aged between 30 and 50 – OCBC said its digital gold investment service has gained traction among investors under 30 years old.
The average number of OCBC customers in this age group who invest in gold also grew more than 40 per cent between 2023 and this year, the lender told BT.
Since 2021, when the service was launched, these numbers have increased more than three-fold.
Currently, more than 60 per cent of the bank’s gold investors have assets under management (AUM) of under S$50,000, which points to gold’s accessibility as an investment for the less affluent.
Vasu Menon, OCBC’s managing director of investment strategy, noted that digital services such as gold exchange-traded funds have made investment in the precious metal more accessible.
He said: “The fact that gold is one of the most popular digital investments among OCBC customers is not a surprise, as geopolitical and economic risks have increased substantially in the past seven years.”
He added that the major elections in the US and Europe could see the re-emergence of far-right politics.
“All these major winds of change have effectively doubled the price of precious metals like gold over the past seven years, as they are seen as a hedge against major uncertainties and a useful portfolio diversifier.”
At UOB, there has been an increase in the number of younger investors as well.
Its head of group personal financial services Jacquelyn Tan noted that the number of the bank’s customers aged between 20 and 30 rose more than 40 per cent between December 2021 and April 2024.
The proportion of their total AUM taken up by gold holdings increased to 50 per cent from 35 per cent over the same period.
Investors above 30 still make up the majority of gold investors at UOB. But investors on the younger end of the spectrum – those aged 30 to 40 – rose about 25 per cent.
Their gold allocation remained relatively stable, at around 20 per cent of their total AUM, during the 2021 to 2024 period.
Priyanka Sachdeva, analyst at Phillip Nova, noted that a rise of hybrid derivatives-based gold products are more appreciated by young investors.
Sachdeva added that the brokerage firm has observed an average 5 per cent increase in gold paper trading and digital investments in 2024 compared to 2023, where the volume of gold trading via contract for difference jumped 20 per cent.
Safe-haven asset
During uncertain times, gold is seen as a safe-haven asset, as shown by customer demand surging almost 30 per cent year on year in 2022, during the pandemic, UOB’s Tan noted.
At UOB, the only local bank offering physical gold investments to retail investors, there was a more than 30 per cent increase in customers holding paper and physical gold products from December 2021 to April 2024. It did not disclose the breakdown of individual products.
There was also a spike in demand for physical gold, including gold bars and gold bullion coins. The number of its customers holding physical gold jumped 45 per cent during the same period.
Tan noted that geopolitical uncertainty has been edging gold higher since 2023.
UOB’s head of markets strategy Heng Koon How said: “The two key drivers pushing gold prices higher, which have remained unchanged since late last year, are the heightened uncertainty in the global geopolitical landscape igniting a safe-haven run to gold, and the strong emerging market and Asian central bank reserve allocation into the yellow metal, with China leading the pack.”
