Bank of Korea Resumes Gold Buying After 13-Year Absence

The Bank of Korea (BOK) has resumed gold buying after a 13-year absence from the market. This move is significant, as it reflects a broader reassessment of reserve diversification in an era of elevated geopolitical friction and dollar-concentration risk.

The BOK currently holds approximately 104.4 tonnes of gold, valued at around $4.79 billion, which accounts for just 1.1% of its total foreign exchange reserves of $427.36 billion. This allocation is strikingly low compared to other central banks, with the United States and Germany holding roughly 69% of their reserves in gold.

The BOK's decision to resume gold buying is not driven by a change in philosophy but rather a recognition that its underallocation has been allowed to compound over time. The bank had previously acquired 40 tonnes in 2011, 30 tonnes in 2012, and 20 tonnes in 2013 before halting purchases due to domestic political scrutiny.

To manage the resumption of gold buying, the BOK has implemented a dual-pathway framework that involves both domestic physical gold procurement and overseas spot gold ETF purchases. This strategy is designed to build exposure gradually while minimizing market impact and managing domestic political optics.