South Korea's central bank plans to buy about one tonne of locally produced gold from as early as December 14. It would be its first physical gold purchase since 2013.
At a glance
- The Bank of Korea plans to buy about 1 tonne of domestic gold, worth roughly 200 billion won or $140 million.
- New Korea Exchange rules let it buy through negotiated block trades from December 14.
- Its gold holdings of 104.4 tonnes make up just 1.1% of reserves at book value.
Background
Central banks hold gold alongside foreign currencies and bonds as part of their reserves. Many have been buying heavily in recent years to reduce reliance on the US dollar. South Korea stopped after 2013, when its purchases drew fierce criticism from politicians as gold prices fell. It restarted in August through gold exchange-traded funds and is now moving back to physical metal.
What happened
The Bank of Korea will buy about one tonne of physical gold produced in South Korea as early as December. The Korea Exchange has set rules letting the central bank buy domestic gold through negotiated block trades from December 14, separate from regular orders.
One tonne is worth roughly 200 billion won, or about $140 million. It would be the bank's first physical gold purchase since February 2013. Gold's slide from its highs this year also lowers the cost of getting started.
How the purchase will work
The central bank has set up the system with the Korea Exchange, the Korea Securities Depository and domestic producer LS MnM. LS MnM and Korea Zinc together produce an estimated 4 to 5 tonnes of gold a year, most of which is exported. The Bank of Korea plans to buy part of that output.
It will pay in won rather than dollars. That keeps the purchase out of the foreign exchange market, where buying dollars could push the currency around.
What it means
The purchase is small against the bank's reserves. It holds 104.4 tonnes of gold, with a book value of $4.79 billion at the end of August. That is only 1.1% of reserves at book value, or 3.4% at market prices, and ranks 39th in the world.
Lawmaker Chung Tae-ho welcomed the move as "a meaningful first step" in diversifying South Korea's foreign exchange reserves. The bank has already bought gold funds, holding 679,765 shares of SPDR Gold Shares, worth about $250 million, at the end of June.
Our read
Outlook: neutral. One tonne is too small to move the global gold price on its own. It adds another central bank to the list of steady buyers, which supports sentiment over time.
What to watch
- Whether the first block trade goes ahead on or after December 14.
- Any sign the Bank of Korea will buy more than one tonne, or buy regularly.
- Other Asian central banks' gold buying in the months ahead.
For information only, not investment advice.
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Detailed analysis
Timeline
- 2026-08-03: The Bank of Korea says it has begun buying gold ETFs and will buy domestic physical gold.
- 2026-09-30: Reports say the bank plans to buy about 1 tonne of domestic gold from December 14.
- 2026-12-14: Korea Exchange block-trade rules for the central bank's gold purchases take effect.
Central Banks
South Korea is returning to physical gold buying after 13 years, adding to central-bank demand.
Currency Impact
Paying in won keeps the purchase out of the dollar market and avoids pressure on the currency.
What could lift prices
- Another central bank returning to gold adds to a long-running source of steady demand.
- With gold at just 1.1% of reserves at book value, South Korea has room to buy more.
What could weigh on prices
- One tonne is small against global central-bank demand.
- Past criticism of the bank's 2013 purchases could make it cautious about buying more.
Country impact
| Country | Impact | Reason |
|---|---|---|
| South Korea | Medium | The purchase starts a shift in how the country holds its foreign reserves. |
Industry impact
| Industry | Effect | Reason |
|---|---|---|
| Central Banking | Positive | The Bank of Korea gains a route to build gold reserves without using dollars. |
Who gains, who loses
- LS MnM and Korea Zinc: They gain a domestic buyer for gold they currently mostly export.
- Overseas buyers of Korean gold: Part of the 4 to 5 tonnes now exported each year would stay at home.
Other ways this could play out
- If the first purchase goes smoothly, the Bank of Korea could make domestic gold buying routine.
- If gold prices fall after the purchase, renewed political criticism could slow further buying.
Price risks
- Central-bank buying elsewhere matters far more to prices than one tonne from Korea.
- Gold's sensitivity to US rate expectations can outweigh steady official demand.
Historical comparison
- 2013: The Bank of Korea's last physical gold purchases drew fierce political criticism when prices later fell.
Technical view
Price is trading below both its 20-period and 50-period moving averages, a bearish alignment.
Computed from metalscost.com's own stored price history.
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South Korea