South Korea’s first pathway for purchasing physical gold in 13 years has been designed around a constraint rather than a target.
The Bank of Korea will consider buying only domestically produced bullion that would otherwise be exported, limiting the available supply to an estimated 4 to 5 metric tonnes annually. That restriction shields Korea’s retail gold market from additional central-bank demand, but it also ensures the program cannot quickly reshape the composition of the country’s foreign exchange reserves.
The central bank announced on August 3 that it had established a purchasing framework with domestic producer LS MnM, the Korea Exchange, and the Korea Securities Depository. Producers will submit export volumes and preferred transaction dates, after which the bank will decide whether to buy based on international prices, domestic market conditions, and its reserve-management plans.
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Transactions will take place through negotiated block trades on the Korea Exchange’s gold market. The Korea Securities Depository will manage settlement and custody.
The arrangement gives the Bank of Korea a standing domestic acquisition channel without committing it to fixed purchases or forcing it to enter the open market at predetermined intervals.
The Bank of Korea described the framework as part of its foreign reserve management. Reuters reported that purchases will be priced against international markets and restricted to export-bound gold to limit the effect on domestic prices.
South Korea produces roughly 40 to 50 tonnes of gold annually, mainly as a byproduct of copper, lead, and zinc refining rather than through dedicated gold mining. LS MnM and Korea Zinc are the country’s largest producers.
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Most output is absorbed domestically. The Bank of Korea is targeting the estimated 4 to 5 tonnes that producers normally send overseas, according to the Korea JoongAng Daily.
At the August 3 spot price of approximately $4,030.34 per ounce, reported by Reuters, 4 to 5 tonnes would be worth roughly $518.3 million to $647.9 million.
Buying the entire estimated export flow would increase Korea’s current physical holdings by approximately 3.8% to 4.8% by weight. The bank has not said that it intends to buy all available exports.
The physical-purchase framework is the second part of a broader change in reserve strategy. The Bank of Korea began purchasing small amounts of overseas-listed spot-gold ETFs during the second quarter, Reserve Management Group Director-General Jung Hee-sup told Korean media. The ETFs provide gold exposure with greater liquidity and lower custody costs, but they are recorded as foreign securities rather than physical gold.
That distinction matters for official reserve reporting. ETF purchases can increase the portfolio’s sensitivity to gold prices without changing the 104.4 tonnes recorded as bullion.
The World Gold Council reported in July that the central bank had completed preparations to invest in overseas gold-backed ETFs, although it said at the time that no allocation had been publicly confirmed.
The resulting two-track structure gives the bank liquid gold exposure through ETFs and a mechanism for gradually adding physical bullion when domestically produced supply becomes available.
The Bank of Korea purchased 40 tonnes in 2011, 30 tonnes in 2012, and 20 tonnes in 2013, accounting for 90 tonnes of its current 104.4-tonne stockpile. It stopped buying after gold prices declined and the purchases attracted political criticism over valuation losses.
By the end of 2025, South Korea ranked 39th among national central banks by reported gold holdings, according to Yonhap. Its ranking falls to 41st when institutions including the International Monetary Fund and European Central Bank are included.
The bank’s June 2026 foreign exchange reserves totaled $427.36 billion. Official reserve data recorded gold at $4.79 billion, or approximately 1.1% of the total, because the bullion is carried using the central bank’s reporting valuation rather than marked entirely to current market prices.
The Bank of Korea has not disclosed a target gold percentage, total acquisition budget, or timetable for moving physical holdings above 104.4 tonnes. Officials have instead described the approach as gradual and long term. Each domestic purchase will depend on producer requests, pricing, the Korea Securities Depository’s infrastructure, and the bank’s wider reserve plan.
