Bank of Korea Returns to Gold Market 13 Years Later, Vows It Has No Timing Clue

The Bank of Korea will resume purchases of physical gold for the first time since 2013, a Reserve Management Group official said, after central banks globally snapped up 288.9 tonnes in the second quarter, their strongest second quarter on record. The bank last bought gold between 2011 and 2013, acquiring 90 tonnes at an average price of about $1,629 an ounce, a position that drew heavy criticism as bullion plunged to $1,180.71 by June 2013, a 38.5% drop from its September 2011 peak of $1,920.30 and gold's worst annual performance since 1981. At the trough, Korea's holdings were worth roughly 27.5% less than its cost, and the unrealized loss widened to about 1.8 trillion won by 2015, prompting lawmakers to summon then-governor Kim Choong-soo and a halt to further buying.

Jung Hee-sub, who runs the bank's Reserve Management Group, rejected any link between the new buying program and the recent pullback in gold prices, which traded near $4,086 an ounce on Tuesday, up 0.8% on the day, 27% below its January record but still roughly 20% higher year to date. "We did not decide the timing of purchases by looking at a specific price… we decide whether to proceed at that time based on domestic and international gold prices and market conditions," Jung told local media. The plan itself is modest: South Korea produces 40 to 45 tonnes of gold annually as a byproduct of copper and zinc smelting, of which only 4 to 5 tonnes are exported, and the central bank intends to bid exclusively for that domestic supply, keeping reserves near their current 104.4 tonnes and maintaining Korea's 39th-place ranking among holders.

Korea's re-entry follows its first gold exchange-traded fund purchases last quarter, recorded as South Korean equities came under sustained pressure. Globally, second-quarter buying of 288.9 tonnes was 62% higher than a year earlier, with Poland leading at 51 tonnes to push its stockpile to a record 632 tonnes, a figure Governor Adam Glapiński has said he intends to grow to 700 tonnes by continuing to "consistently buy gold, taking advantage of the recent price drops." China added 33 tonnes, extending a long buying streak, while Russia was a net seller of 22 tonnes, and the World Gold Council reported that 56.5 tonnes were added in the first quarter, putting first-half totals at 345 tonnes, the weakest start since 2022, even as a record 45% of central banks surveyed said they expect to add more within a year.

The 90 tonnes Korea accumulated between 2011 and 2013, originally valued at about $4.7 billion, are now worth roughly $11.8 billion at recent prices, a gain of about $7 billion on paper, underscoring the long-term outcome of a buying program that was once mocked for its timing. BullionStar noted the arc on October 28, summarizing the sequence as purchases near the 2011 peak, a decision to sit out the 2024 to 2025 rally to record highs, and a re-entry that officials describe as routine monitoring of domestic and international market conditions rather than a judgment on price levels.