Bank of Korea Invests in Gold After 13-Year Drought

The Bank of Korea has made its first gold-linked investment in 13 years by purchasing 679,765 shares of SPDR Gold Shares worth around $250 million. This move marks a return to investing in gold for the central bank, which last did so in 2013.

According to a filing with the US Securities and Exchange Commission, the Bank of Korea held no shares of the world's largest physically backed gold exchange-traded fund three months prior to this investment. The purchase doesn't add to its official bullion holdings as Gold ETFs are classified as securities and form part of foreign-exchange reserves.

Choi Kyuho, an economist at Hanwha Investment & Securities Co., noted that the Bank of Korea's allocation to gold is relatively low and that from a global standards perspective, there is room for additional gold purchases. He expects the bank to increase its gold holdings in the future.

The move by the Bank of Korea comes as central banks globally have stepped up their accumulation of bullion, seeking diversification and safe-haven assets to hedge against geopolitical and financial risks. In the second quarter, monetary authorities bought a record 289 tons of gold, according to the World Gold Council.