Gold bars are on a display at the Korea Gold Exchange, a trading platform for a range of precious metals, in central Seoul, Sept. 23. Yonhap

The price of gold in Korea is rising, fueled by increased tensions in the Middle East and the U.S. Federal Reserve's rate-cutting cycle, which began in September with an unusually large half-percentage-point cut.

According to the Korea Exchange (KRX), the price of gold has been rising after surpassing the 110,000 won ($83) mark last month.

For instance, the spot price of gold per gram closed at 112,500 won on Wednesday after gaining 0.46 percent from the previous trading session.

The spot price for 3.75 grams of gold was 482,000 won, which is near this year's high of 485,000 won reached on Sept. 26.

"Gold is increasingly gaining attention as a safe haven asset as the conflict between Israel and Hezbollah is deepening and can affect countries in the region," the Korea Gold Exchange, a trading platform for a range of precious metals, said.

The exchange highlighted Israel's plans for a rapid retaliation against Iran following Tehran's launch of 180 ballistic missiles at Israel on Tuesday.

This missile attack was part of a tit-for-tat escalation between Israel and the Iran-backed militant group Hezbollah in Lebanon.

A KRX official, who spoke on condition of anonymity, noted that the ability to make "small investments in grams" makes gold an attractive safe haven asset.

Lee Young-hoon, a Samsung Securities analyst, pointed out that the Fed's rate-cutting cycle is contributing to the growing preference for gold.

"It is expected that the easing cycle will persist, meaning investors will look for other safe-haven assets after investing in the greenback and earning high interest," Lee said.

The analyst noted that the U.S. central bank lowered the key interest rate by 50 basis points to a range of 4.75 percent to 5 percent on Sept. 18.

This marked the first rate cut after over four years of tightening monetary policy and pausing on rate increases.

The Fed projected that the base rate would decrease by another half a percentage point by the end of this year, by a full percentage point next year and by half a percentage point in 2026, though it acknowledged that such predictions can be uncertain.

In the first half of 2024, gold transactions on the KRX amounted to 879.3 billion won, representing a 40 percent increase from a year earlier.

In terms of trading volume, it rose from 7,786 kilograms to 8,962 kilograms over the same time period.

Retail investors made up the largest share of the transactions at 42.9 percent, while institutional investors accounted for 39.7 percent, and companies specializing in gold transactions represented 15.7 percent.