The Bank of Korea has restarted gold investments through exchange-traded funds (ETFs), marking its first purchase of the precious metal in 13 years. The central bank also plans to diversify its domestic gold procurement channels, aiming for a medium to long-term increase in its physical gold holdings.
According to data from the Bank of Korea, as of the end of June this year, South Korea's foreign exchange reserves stood at $427.36 billion, with gold reserves valued at $4.79 billion, accounting for 1.1% of the total. All 104.4 tons of gold held by the central bank are stored at the Bank of England. The Bank of Korea had previously purchased 90 tons of gold between 2011 and 2013, but had not added to its gold holdings for the subsequent 13 years. Data from the World Gold Council shows that as of the end of 2025, the Bank of Korea's gold holdings ranked 39th globally among central banks.
Gold futures prices, which had surged past $5,300 per troy ounce (31.1 grams) earlier this year, retreated to $4,049 by the end of last month. Jung Hee-seop, head of the Bank of Korea's Foreign Exchange Operations Division, stated, "With frequent geopolitical risks recently, central banks' attention to gold as a safe-haven asset has been continuously rising. South Korea's gold reserves are relatively low compared to other countries, creating a need to increase holdings. Additionally, the decline in gold prices has eased the pressure of acquisition costs, leading to this decision after comprehensive consideration."
To diversify its acquisition channels, the Bank of Korea, in addition to investing in gold through ETFs, also plans to purchase physical gold to better navigate market volatility. On the 3rd of the month, the central bank announced plans to establish a cooperative system with domestic gold producers, the Korea Exchange (KRX), and the Korea Securities Depository (KSD) to build a foundation for purchasing locally mined gold. The central bank intends to leverage the trading, settlement, and storage infrastructure of the KRX gold market, operated by the Korea Exchange and Korea Securities Depository, to acquire gold from domestic producers that was originally destined for export, based on international gold prices. The target of the acquisition is not the gold intended for the domestic market, but the inventory that companies had planned to sell overseas.
A Bank of Korea official noted, "This method will not create additional demand in the domestic gold market, so its impact on domestic supply, demand, and prices will be limited." The transactions will not be conducted through standard exchange-based competitive bidding but through negotiated block trades. Both buyers and sellers will agree on price, quantity, and other terms in advance, avoiding any disruption to exchange prices and ensuring a smooth transaction process.
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