BOK Reenters Gold Market with ETF Purchases

The Bank of Korea (BOK) has resumed investing in gold through exchange-traded funds (ETFs) after a 13-year hiatus. This move is part of efforts to diversify its foreign exchange reserves and reduce reliance on U.S. dollar-denominated assets.

As of the end of June, gold accounted for $4.79 billion, or 1.1 percent, of the BOK's $427.36 billion in foreign exchange reserves. The BOK currently holds 104.4 metric tons of gold, all of which is stored at the Bank of England.

The BOK has not made any additional gold purchases since acquiring 90 metric tons between 2011 and 2013. However, with the recent decline in gold prices, making purchases more affordable, the BOK plans to gradually expand its holdings of physical gold.

According to a BOK official, central banks have become increasingly interested in gold as a safe-haven asset amid heightened geopolitical risks. The BOK will establish a cooperative framework with domestic gold producers, the Korea Exchange, and the Korea Securities Depository (KSD) to purchase export-bound gold produced by domestic miners at international gold prices.