South Korea’s Central Bank Resumes Gold Purchases After 13 Years

South Korea’s central bank ended a 13-year pause in gold purchases on August 3. The Bank of Korea (BOK) has resumed buying gold through two channels: overseas-listed spot gold ETFs and a newly created domestic route to acquire locally produced physical gold.

To execute domestic purchases the BOK partnered with local industry and market infrastructure providers, including copper smelter LS MnM, the Korea Exchange, and the Korea Securities Depository. That arrangement establishes a formal mechanism for the central bank to buy Korean-mined or locally processed bullion for the first time since 2013.

“Interest in safe-haven assets, such as gold, has increased significantly due to the recent escalation of geopolitical risks,” said Jung Hee-sup, director-general of the BOK’s Reserve Management Group, explaining the policy shift and the bank’s motivation to diversify its reserves.

Why Did the Bank of Korea Stop Buying Gold in the First Place?

The BOK last engaged in sustained gold purchases between 2011 and 2013, acquiring 40 tonnes in 2011, 30 tonnes in 2012 and 20 tonnes in 2013. After those purchases, gold prices declined and the bank faced criticism at home for having bought near the market peak. The political fallout led the BOK to halt further bullion purchases, leaving its gold holdings unchanged for the next 13 years.

By June 2026, the BOK’s holdings stood at 104.4 tonnes of gold, valued at roughly $4.79 billion. That quantity represents only 1.1% of its total foreign exchange reserves, which were reported at $427.36 billion. That low percentage is the central indicator driving the renewed buying strategy.

What Does South Korea’s Gold Reserve Level Actually Tell You?

By global standards, South Korea’s gold allocation is unusually low. Many advanced economies keep 10% to 20% of foreign exchange reserves in gold; for some long-standing holders like the United States and Germany, the share is roughly 69%. Even Japan, which has historically been conservative on bullion, maintains a modest allocation near 5%.

At 1.1%, South Korea sits well below comparable peers. That gap is not primarily ideological: it is the product of a prolonged period of inaction after purchases that proved politically costly. The BOK’s recent statements frame the change in approach around rising geopolitical risk and the strategic need to reduce concentration in dollar-denominated assets. In short, the bank’s view on gold as an asset class has not dramatically shifted — the bank’s calculation of the cost of remaining underallocated has.

How Does the New Purchase Framework Actually Work?

Under the new arrangements, the BOK will acquire domestically produced gold that firms such as LS MnM and Korea Zinc otherwise might export. Purchases will be executed through negotiated block trades on the Korea Exchange, with settlement and custody managed by the Korea Securities Depository.

Two operational features are notable. First, these domestic transactions are settled in Korean won rather than in foreign currency, meaning the central bank can increase its bullion holdings without immediately drawing down foreign exchange assets. Second, the purchased gold will remain in Korea rather than being stored overseas at institutions such as the Bank of England, where the BOK has historically kept part of its reserves. Both choices reduce reliance on dollar funding and on foreign custody arrangements.

The BOK expects to secure roughly 4 to 5 tonnes per year via the domestic channel. While small relative to total reserves, this domestic program is paired with purchases of overseas-listed spot gold ETFs. The bank emphasizes that its approach will be gradual and long-term rather than a single large reallocation.

Why Does This Matter for Gold’s Structural Demand Case?

The Bank of Korea is not the largest buyer on the global stage, but its return to the market matters as a signal. Since 2022 global central bank purchases have accelerated to roughly 1,000 tonnes per year, about double the long-term historical average. In the second quarter of 2026, central banks bought 288.9 tonnes — a second-quarter record and a 62% increase year over year, according to industry data reported for that period.

Those purchases have mainly been driven by emerging-market central banks seeking to diversify away from the U.S. dollar. South Korea’s decision differs because it comes from a G20 economy with close ties to the United States and a long history of avoiding gold accumulation. The BOK’s choice reflects a pragmatic reassessment of reserve composition rather than a political or adversarial stance.

When developed-economy central banks that have remained on the sidelines begin to act, they can accelerate an existing trend. The BOK’s move is therefore significant less for the immediate tonnage and more for the precedent it sets among peers with similar reserve profiles.

As of this writing, gold trades at approximately $4,084 per ounce. Market participants will watch both the BOK’s pace of acquisitions and whether other advanced economies follow suit.

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SOURCES
1. Korea Times — BOK to buy domestically produced gold for 1st time in 13 years, August 3, 2026
2. Korea JoongAng Daily — Bank of Korea resumes gold buying after 13-year pause with ETFs and domestic purchases, August 3, 2026
3. UPI — Bank of Korea prepares first physical gold purchase since 2013, August 3, 2026
4. Mining.com / Reuters — South Korea’s central bank to buy gold from domestic producers, August 3, 2026
5. The Deep Dive — Bank of Korea to buy gold again after 13 years, but only from domestic producers, August 4, 2026
6. World Gold Council — Gold Demand Trends Q2 2026, July 30, 2026
7. GoldSilver — Live Gold and Silver Spot Prices (price reference)

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions.

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