Bank of Korea Returns to Gold Purchases After 13-Year Absence

The Bank of Korea is set to purchase gold from domestic producers after a 13-year hiatus. The central bank has established a framework for buying physically produced bullion, with LS MnM and the Korea Exchange involved in the process.

The program's scope is limited by requiring the Bank of Korea to buy only domestically produced gold that would otherwise be exported. This restriction shields the retail market from additional demand and ensures the bank cannot quickly reshape its foreign exchange reserves.

The framework allows the Bank of Korea to purchase up to 4-5 metric tonnes of gold annually, with transactions taking place through negotiated block trades on the Korea Exchange's gold market. The Korea Securities Depository will manage settlement and custody.