OCBC, UOB see surge in gold investments as glint catches eye of younger investors

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• Gold up 15 per cent year to date in 2024

• OCBC: one in six of all digital investments are put into precious metals

• UOB: Younger investors allocating more AUM into gold

Younger retail investors in Singapore are turning to gold as an affordable investment in times of uncertainty, market players said. In particular, the younger crowd are also looking at digital gold investments.

Spot gold prices surpassed US$2,400 per ounce in May and have been steady at around US$2,300 since then. Prices are up more than 15 per cent 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, compared with 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 highlighted. 

Surprisingly, while gold is often associated with older investors – about 70 per cent of its gold investors are between 30 and 50 years old, OCBC said that its digital gold investment service has gained traction among investors under 30 years old. 

The average number of OCBC customers in the age group who invest in gold also grew more than 40 per cent in 2024 from 2023, the lender told BT. 

For the period 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 changes have effectively caused the price of precious metals like gold to double in value 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 years old rose more than 40 per cent from December 2021 to April 2024. 

The proportion of their total AUM taken up by gold holdings increased to 50 per cent from 35 per cent during the same period.

Investors above 30 years old still make up the majority of gold investors at UOB. But investors in the younger end of the spectrum – those in the 30 to 40 age group – 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. 

Gold as a 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 times, said Tan.  

At UOB – the only local bank that offers 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. 

She noted that geopolitical uncertainty has been edging gold higher since 2023.

“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,” she added.