Why is BOK buying gold again?

After more than a decade, the Bank of Korea is back on a gold-buying spree, raising its exposure to the precious metal as it joins central banks around the world in diversifying their foreign reserves.

According to the BOK, the central bank currently holds 104.4 metric tons of gold, valued at $4.79 billion, or 1.1 percent of its total foreign exchange reserves of $427.36 billion at end-June.

The relatively small share highlights the BOK’s limited exposure to gold compared with other central banks. As of end-2025, the BOK ranked 39th among central banks worldwide in terms of gold holdings, according to the World Gold Council.

The central bank significantly increased its gold holdings between 2011 and 2013, but had not made any additional purchases over the following years after attacks from political circles when gold prices dipped.

But recent moves by the BOK suggest that the central bank is ready to increase its exposure to gold once again, signaling it is reassessing the role of gold in its foreign reserve portfolio.

While the BOK had traditionally built its gold holdings by purchasing physical gold, its latest steps mark a different investment strategy.

The BOK purchased 679,765 shares of the SPDR Gold Trust ETF in the second quarter, a US Securities and Exchange Commission filing showed. The holdings were valued at $250.41 million, or about 354.5 billion won, at the end of June.

Unlike its previous purchases of physical gold, the latest investment gives the central bank exposure to gold through a financial asset rather than by directly holding the metal.

The BOK also plans to up stake in physical gold, but under a different playbook.

Like most other central banks, the BOK has traditionally stored its gold at the Bank of England. However, it recently joined forces with relevant institutions here to establish an institutional framework for purchasing domestically produced gold.

Under the new initiative, the BOK will purchase locally produced gold and store it through the Korea Securities Depository.

“We can secure a new channel for purchasing domestically produced gold, diversify our gold purchasing channels and diversify storage locations, which are currently concentrated at the Bank of England,” said Jung Hee-sup, director general of the BOK’s Reserve Management Group.

In recent years, central banks around the world have been ramping up their gold holdings, seeking to reduce their reliance on the US dollar amid concerns over Washington’s growing use of financial sanctions.

“Amid heightened geopolitical risks, interest in gold as a safe-haven asset has grown, and we determined that the BOK needed to increase its relatively small gold holdings,” Jung said.

“The recent decline in gold prices from their peak has also eased the price burden to some extent.”

Net purchases of gold by central banks in the April-June period totaled 289 tons, more than five times the volume of the prior three months, according to the World Gold ⁠Council. This marked a record high for a second quarter.

The central banks of Poland, China and India have been the top gold buyers in recent years.

“In the past, jewelry demand accounted for more than half of the gold market, but the shares of investment and central bank demand have increased sharply in recent years,” said Jung Hyun-jong, an analyst at Korea Investment & Securities.

“This suggests that gold is shifting in status from a simple consumer commodity to a financial asset and an alternative currency that can serve as a hedge against geopolitical risks, inflation and currency depreciation,” Jung said.

silverstar@heraldcorp.com