Korea Exchange Creates Separate Trading Track for Bank of Korea Gold Purchases

The Korea Exchange has set up a new system for the Bank of Korea to buy domestically produced gold on the KRX Gold Market. This comes after the central bank announced in August that it would resume physical gold purchases, which had been suspended for 13 years. The exchange will allow the Bank of Korea to buy gold through negotiated block trades, rather than competitive bidding.

The annual volume the central bank could consider buying is roughly equal to one month of recent trading on the KRX Gold Market, according to industry sources. Recent trading volume on the market has been around 5 tons per month this year. The rule changes are designed to limit the impact on on-exchange prices and supply and demand.

The Bank of Korea will use a separate trading framework to buy gold for its foreign exchange reserves. Gold bought through this system cannot be resold, and value-added tax will be exempted when withdrawals are made for building reserves. The central bank currently holds 104.4 tons of gold and has not increased its physical holdings since 2013.