Korea Central Bank Re-Enters Physical Gold Market Amid ETF Buying Streak

The Bank of Korea has announced plans to purchase physical gold for its reserves in December, marking its first such acquisition since 2013. This move comes as exchange-traded funds (ETFs) continue to see net inflows for the tenth consecutive week.

The central bank intends to add roughly one tonne of domestically sourced gold to its reserves, worth approximately 200 billion won. The transaction will be settled through block trades conducted directly in the local currency, allowing the Bank of Korea to redirect metal destined for export into its own reserves without drawing down foreign exchange holdings.

This decision underscores the commitment of monetary authorities to holding physical metal, following net central bank purchases of 289 tonnes worldwide in the second quarter. The broader backdrop for gold remains demanding, with the metal sitting 26% below its 52-week high due to hawkish signals from the Federal Reserve and elevated US Treasury yields.