Bank of Korea Launches Domestic Gold Buying Program for First Time Since 2013

The Bank of Korea announced Monday it has started buying spot gold exchange-traded products, marking its first gold purchases since 2013. The central bank also established a framework to purchase domestically produced gold in the near future through a cooperative system involving the Korea Exchange, the Korea Securities Depository, and domestic gold producers LS MnM and Korea Zinc. Jeong Hee-sup, head of the Bank of Korea's Reserve Management Group, stated that geopolitical risks becoming a persistent feature of the global environment have driven significant interest in gold as a safe-haven asset among central banks. The move aligns with broader central bank gold demand trends during the second quarter, which analysts cite as critical support for gold prices.

Bank of Korea Establishes Domestic Gold Purchase Framework

Under the announced framework, the central bank will purchase domestically produced gold through a cooperative system involving the Korea Exchange, the Korea Securities Depository, and domestic gold producer LS MnM. Korea Zinc is also expected to supply eligible gold.

According to reports, LS MnM and Korea Zinc produce an estimated 4 to 5 metric tons of gold annually for export. The Bank of Korea plans to purchase part of that output when market and reserve management conditions are favorable.

Central Bank Adopts Gradual Long-Term Gold Acquisition Strategy

Jeong stated that the central bank's gold purchases are part of a long-term strategy. "We do not plan to make a large purchase all at once," Jeong said. "We intend to gradually increase the share of gold according to medium- and long-term needs."

Korea's gold purchases do not come as a surprise, as the central bank has been signaling its plans for several months. "Given gold's role as an inflation hedge and its potential as an alternative to the U.S. dollar, it's evident that gold should be considered one of the viable assets from a medium- to long-term perspective," Jeong said during a central bank panel discussion at the London Bullion Market Association's annual precious metals conference.

FAQ

What did the Bank of Korea announce on Monday? The Bank of Korea announced it has started buying spot gold exchange-traded products and established a framework to purchase domestically produced gold, marking its first gold purchases since 2013.

Why is the Bank of Korea buying gold? Jeong Hee-sup, head of the Bank of Korea's Reserve Management Group, stated that geopolitical risks becoming a persistent feature of the global environment have driven significant interest in gold as a safe-haven asset among central banks.

How much gold do Korean producers supply annually? LS MnM and Korea Zinc produce an estimated 4 to 5 metric tons of gold annually for export. The Bank of Korea plans to purchase part of that output when market and reserve management conditions are favorable.