A collection of yellow gold rings, necklaces and bracelets are on display at a jewelry store in Seoul, Sunday. Yonhap

A growing number of bank clients are investing in gold using a deposit account that allows them to buy and sell the precious metal, whose price is surging due to heightened geopolitical risks and an increasing preference for safe haven assets.

The country's four major commercial banks — KB, Shinhan, Hana, and Woori — collectively reported a total of 255,887 accounts on Monday, in which depositors entrust cash to the banks that purchase an equivalent value of gold on their behalf following consultation.

Account holders have the option to possess the actual gold they've invested in or to wait for market prices to appreciate, enabling them to withdraw a greater cash amount than their initial investment.

The number of so-called "gold banking accounts" increased steadily as the war in Ukraine drags on and financial market uncertainties increase due to the Israel-Hamas military conflict.

The number climbed from 243,981 in December 2022 to 244,146 in March 2023, 244,475 in June 2023, 247,944 in September 2023, 250,945 in December 2023, and 255,110 in March this year.

On New York's Commodity Exchange (COMEX), gold prices exceeded the $2,100 mark for the first time in history on March 4. It then surpassed the $2,300 mark on April 3, before scaling to record high of $2,448.8 on April 12. The price slightly eased afterward.

COMEX is the primary futures and options market for trading metals, including gold, silver, copper and aluminum.

On Seoul's Korea Exchange (KRX), gold was priced at 105,790 won ($75.60) per gram on April 12, up 3.18 percent from the previous day's close.

The outstanding balance of gold under "gold banking accounts" at KB, Shinhan, Hana and Woori totaled 600.7 billion won as of April 12, up 14.6 percent from January.

"Given the current circumstances, such as Iran's recent missile attacks against Israel and the potential for a retaliatory strike from Israel, there is a strong possibility that gold prices could experience a further increase," a spokesman at a commercial bank said on condition of anonymity.

"We accordingly are thinking about better services to maximize and diversify returns to gold banking account holders."

Market observers say expectations over the U.S. Federal Reserve's rate cut is also behind the high gold prices, although the timing of such a cut may be delayed.

The Fed was expected to begin the rate cut in June.

But stubbornly high U.S. inflation and a robust American economy are likely to keep the Fed on hold before it goes ahead to lower the benchmark interest rate.

"Gold prices and interest rates have an inverse relationship, so gold tends to become more appealing in a low interest rate environment," Hana Bank researcher Seo Jung-hoon said.