BOK Re-Enters Gold Market with Domestic Purchase Plan

The Bank of Korea (BOK) is establishing a new channel to purchase domestically produced gold for the first time in 13 years.

The central bank plans to buy export-bound gold from domestic producers to diversify its foreign reserves and hedge against geopolitical risk.

Jong Hee-seop, head of the BOK's Reserve Management Group, said that most of the central bank's gold is currently stored overseas. 'If we secure a domestic channel, the advantages are that gold becomes easier to sell and lending income can be generated, though storage costs would also arise,' he said.

The BOK plans to use the trading, settlement, and custody infrastructure of the KRX gold market to purchase export-bound gold from domestic producers at international market prices. The two domestic gold producers together export an annual average of four to five tons, according to the BOK.