Bank of Korea to Resume Gold Purchases After 13-Year Hiatus

The Bank of Korea is preparing to resume gold purchases after a 13-year absence, marking a notable shift for the institution. The last time the bank bought gold was in 2013. According to reports, the purchases will be made domestically, utilizing gold that would otherwise be exported. The head of reserves at the Bank cited geopolitical risks as a significant factor motivating this renewed interest in gold, aligning with a broader trend among central banks to diversify their reserve assets.

The plan is still in its early stages, with no decisions made regarding the timing or scale of the purchases. South Korea produces approximately 40 to 45 tonnes of gold annually, primarily as a byproduct of copper and zinc smelting. Of this total, only around 4 to 5 tonnes are typically available for export, which is the portion the central bank would target under its current plan.

This development comes at a time when global central bank gold purchases reached a record high of 289 tonnes in the second quarter of 2023, underscoring a growing trend of central banks reassessing their reserve strategies amid ongoing geopolitical uncertainties. While the Bank of Korea's planned purchases are likely to remain modest, the decision to re-enter the gold market after such a long hiatus adds to the narrative of central banks adapting their reserve strategies in response to changing global dynamics.