Gold’s resurgence is giving U.S. investors another reason to watch demand for bullion ETFs globally, as central banks increasingly turn to exchange-traded products to gain exposure to the metal. South Korea’s central bank has joined that trend, disclosing a roughly $250 million position in the world’s largest gold ETF
The Bank of Korea disclosed on August 12 that it held 679,765 shares of SPDR Gold Trust, valued at $250.41 million at the end of the second quarter, according to a filing with the U.S. Securities and Exchange Commission. The purchase marks the central bank’s first investment in gold in 13 years.
For U.S. asset managers and investors, the move underscores how institutional demand for gold is broadening beyond physical bullion and into highly liquid ETF markets. It also comes as expectations for U.S. interest rates have shifted, potentially strengthening the investment case for an asset that produces no income but can benefit from lower yields and a weaker dollar.
The Bank of Korea last bought gold in 2013, when it purchased 20 metric tons of physical bullion. This time, it chose an ETF, gaining exposure without directly holding the metal.
SPDR Gold Trust, commonly known as GLD, had $144.1 billion in net assets as of August 11, making it roughly 50 times the size of South Korea’s largest physical-gold ETF, ACE KRX Gold Spot, which had about $2.9 billion.
The central bank didn’t disclose when it made the purchase. Because no position was reported at the end of the first quarter, the shares are believed to have been acquired between April 1 and June 30.
Gold-related ETFs listed in South Korea have surged alongside bullion. Through August 12, ACE KRX Gold Spot had gained 7.4% for the month, while TIGER KRX Gold Spot rose 7.3%. Futures-based products TIGER Gold Futures (H) and KODEX Gold Futures (H) gained 7.4% and 7.5%, respectively.
Gold-mining ETFs have delivered even stronger returns. HANARO Global Gold Mining Companies, which invests in international gold producers, climbed 19.1% through August 12.
Spot gold rose 8.9% from $4,046.21 an ounce at the end of July to $4,408.08 on August 12, according to Yonhap Infomax. The metal remains well below its record of $5,598.29 an ounce set on January 29.
The rally has coincided with a shift in expectations for Federal Reserve policy. Slower growth in July employment and consumer prices has reduced expectations for another interest-rate increase at the Fed’s next meeting.
Gold typically becomes more attractive when interest rates are falling or expected to fall because it doesn’t pay interest. A weaker dollar can provide an additional boost by making bullion cheaper for overseas buyers.
For investors, however, the choice of gold exposure matters. Bullion ETFs largely track the price of the metal, futures-based funds can introduce additional costs and tracking differences, while mining-company ETFs add corporate earnings, operating and equity-market risks. The widening performance gap between these products is a reminder that a gold rally can produce very different outcomes across the investment spectrum.
