South Korea's Central Bank Returns to Gold Buying, Joining Global Trend
The gold market has seen one of its most volatile starts to a year in recent years. The price surged past $5,500 per ounce in January but tumbled to $4,100 by August due to renewed tensions over the Iran war and expectations that the US Federal Reserve could raise interest rates.
The sharp correction was cushioned by steady central bank buying, with 288.9 tonnes of gold purchased in the second quarter, a 62% increase from a year earlier. South Korea's central bank has now returned to the market after a 13-year hiatus, buying back its original holdings and more.
The country last bought gold between 2011 and 2013, acquiring 90 tonnes at an average price of $1,629 an ounce for a total investment of about $4.7 billion. The timing appeared disastrous as the price tumbled to $1,180.71 by June 2013, but those same 90 tonnes are now worth roughly $11.8 billion.
Billionaire hedge fund manager John Paulson and Jefferies' Global Head of Equity Strategy Christopher Wood believe that gold may be at the beginning of a long-term bull run, with demand broadening from central banks adding to their reserves alongside rising interest from the private sector.