ICYMI – Bank of Korea to resume gold buying after 13 years, not large buying.
The move is symbolically significant given how long the Bank of Korea has stayed on the sidelines, but the scale involved is modest against the backdrop of broader central bank buying, which reached its strongest second quarter on record at 289 tonnes globally. Korea’s domestic output leaves only a small slice, around 4 to 5 tonnes annually, available for the kind of purchases being discussed, meaning any near-term impact on gold demand is unlikely to be material on its own. The more notable signal is the stated motivation, with geopolitical risk cited as a driver alongside a plan to diversify storage locations, echoing a broader trend of central banks reassessing where and how they hold reserves. Confirmation remains early stage, with no decisions yet on timing or size, so the market impact for now sits more in sentiment than in actual demand.
—
Earlier:
South Korea’s central bank is preparing to buy gold again after more than a decade on the sidelines, a small but symbolically notable shift as geopolitical risk reshapes reserve strategy worldwide.
Summary:
- The Bank of Korea plans to purchase physical gold for the first time in 13 years, having last bought in 2013
- Purchases would reportedly be made domestically, drawing from gold that would otherwise have been exported
- The bank’s reserves head cited geopolitical risks as a motivating factor behind the renewed institutional buying
- The bank also plans to diversify its storage locations for gold reserves
- A Bank of Korea spokesperson said the plan is in its very early stages, with no decisions made on timing or size of purchases
- South Korea produces around 40 to 45 tonnes of gold a year, mostly as a byproduct of copper and zinc smelting, of which only 4 to 5 tonnes are typically exported, representing the slice the bank would be bidding for
- Central banks globally bought 289 tonnes of gold in the second quarter, their strongest second quarter on record
The Bank of Korea is preparing to buy physical gold for the first time in 13 years, marking a notable shift for a central bank that has stayed out of the market since 2013. According to a South Korean news report published on August 3, the purchases would be made domestically, drawing from gold output that would otherwise have been destined for export markets. A Bank of Korea spokesperson told Central Banking on August 4 that the plan remains in its very early stages, with no decisions yet made on the timing or scale of any purchases.
The bank’s head of reserves cited geopolitical risks as a key motivating factor behind the renewed interest in gold, a rationale consistent with the approach many central banks have taken in recent years as reserve diversification away from traditional holdings has gained momentum. Alongside the plan to resume buying, the Bank of Korea is also said to be considering diversifying the physical locations where it stores its gold reserves, a move that would align it with a broader trend among central banks seeking to reduce concentration risk in how and where reserves are held.
The scale of the plan itself is small in absolute terms. South Korea produces an estimated 40 to 45 tonnes of gold annually, though most of this arises as a byproduct of copper and zinc smelting rather than dedicated mining. Of that total, only around 4 to 5 tonnes are typically sold abroad, and it is this modest slice of domestic supply that the central bank would be bidding for under the plan as it currently stands. That makes the purchases far smaller than the scale of buying seen from some other central banks in recent quarters.
The timing coincides with a period of unusually strong central bank gold demand more broadly. Central banks bought a combined 289 tonnes of gold in the second quarter, the strongest second quarter on record, underscoring how widespread the shift toward gold as a reserve asset has become amid ongoing geopolitical uncertainty. While the Bank of Korea’s own purchases are likely to remain modest given the limited domestic supply available, the decision to re-enter the market after such a long absence adds another data point to a global pattern of central banks rethinking their reserve strategies, both in terms of what they hold and where they choose to hold it.
This article was written by Eamonn Sheridan at investinglive.com.