Gold bars are stored in a safe deposit room in Munich, Germany, on Jan. 28.REUTERS/YONHAP
The Bank of Korea (BOK) has begun buying gold for the first time in 13 years, the central bank said Monday.
After recently starting to invest in overseas-listed spot gold exchange-traded funds (ETF), the central bank has also established a framework to purchase domestically produced gold in the near future.
The BOK’s Reserve Management Group increased its gold exposure in the second quarter by purchasing overseas-listed spot gold ETFs.
"We have begun purchasing spot gold ETFs on a very small scale,” Jung Hee-sup, director-general of the Reserve Management Group, said. "Although ETFs are not treated as physical gold, the purchases increase our exposure to gold."
The BOK has traditionally purchased gold only in physical form and stored it at the Bank of England. It has not bought additional gold since acquiring 20 metric tons in 2013.
The BOK’s holdings have remained unchanged at 104.4 metric tons in total for the past 13 years. It is equivalent to about 1.1 percent of its foreign exchange reserves.
As of the end of last year, the BOK ranked 39th among the world's central banks in gold holdings.
Korea’s central bank had actively avoided buying gold because it generally generates lower returns than stocks or bonds and does not produce income such as interest or dividends.
The BOK also refrained from buying more gold after coming under political criticism when gold prices plunged following its purchases between 2011 and 2013. It bought 90 metric tons during the period, nearly 90 percent of its current holdings.
People walk in front of the Bank of England in London's financial district on Feb. 5.AP/YONHAP
The BOK's stance shifted this year after gold prices climbed to record highs.
As inflation concerns and geopolitical risks fueled the rally, central banks around the world increased their gold purchases.
"With geopolitical risks becoming a persistent feature of the global environment, interest in gold as a safe-haven asset has grown significantly among central banks," Jung said. "We also took into account the need to increase our gold holdings, which remain relatively low compared with those of other countries."
The recent pullback in gold prices has also reduced the burden of making additional purchases.
Beyond gold ETFs, the BOK has secured a channel to buy domestically produced gold.
Most gold produced in Korea is obtained during the refining of copper, lead and zinc. LS MnM and Korea Zinc are the country's leading producers, together producing about 40 to 50 metric tons a year.
The BOK is considering buying roughly 4 to 5 metric tons that are not absorbed by domestic demand and would otherwise be exported. The move is to avoid affecting local gold demand or prices.
To minimize market disruption, the purchases will be conducted through negotiated block trades rather than regular exchange trading. Buying gold in local currency rather than dollars is another advantage.
Purchasing domestically produced gold would also allow the BOK to diversify where its reserves are stored. Central banks around the world have increasingly been moving gold into domestic vaults or broadening overseas storage locations to reduce geopolitical risks. They are moving away from the long-standing practice of keeping reserves primarily in London or New York.
The Bank of Korea's main building in Jung District, central Seoul, as seen on Aug. 12, 2025.[YONHAP]
Of 76 central banks worldwide, 57 percent answered that they used the Bank of England as a storage location for their gold, down 7 percentage points from a year earlier, according to this year’s survey by the World Gold Council.
”Keeping gold overseas makes it easier to sell and can generate income through gold lending, but we also took into account the relatively high storage costs," Jung said.
The BOK plans to use the Korea Securities Depository's settlement and storage infrastructure for gold. The timing of its first purchase of domestically produced gold will be decided once the depository completes the necessary infrastructure. The central bank will also work with the Korea Exchange to use its trading platform.
The BOK has not disclosed a specific target for its gold holdings.
"We will take a gradual, long-term approach to gold purchases," Cho Sok-pang, head of the Reserve Management Group’s planning department, said. "Rather than buying mechanically based on price movements, our focus is on gradually increasing the share of gold in our reserves."
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
