The Bank of Korea is preparing to increase its gold holdings for the first time since 2013, marking a significant shift in reserve management as central banks worldwide boost allocations to bullion to reduce reliance on U.S. dollar assets and strengthen protection against geopolitical risks.
Senior central bank officials said the Bank of Korea has reached a preliminary decision to raise the share of gold in its foreign-exchange reserves, reversing more than a decade of reluctance to accumulate the precious metal.
“We had maintained a conservative stance on gold purchases, but changing market conditions and outside perspectives have led us to conclude that increasing our holdings is appropriate,” a senior Bank of Korea official said.
The central bank is evaluating several options, including direct purchases of physical bullion and accepting interest payments in gold rather than cash on bullion stored at the Bank of England and lent to bullion banks. Officials said the bank has previously received interest payments in gold under similar arrangements.
The Bank of Korea is also reviewing investments in spot gold exchange-traded funds and gold futures as part of a broader strategy to diversify reserve assets. Officials said the bank has already completed operational preparations, including opening accounts for overseas-listed spot gold ETFs.
The move reflects a broader shift in thinking within the central bank.
Recent research published by the Bank of Korea’s Economic Research Institute has argued that reserve managers should prepare for a gradual weakening of the U.S. dollar’s role as the world’s dominant reserve currency while recognizing gold’s growing importance as a non-seizable reserve asset during periods of geopolitical fragmentation and financial sanctions.
The institute recommended that reserve management focus not only on the overall size of foreign-exchange reserves but also on their composition, including allocations to gold, as well as access to international liquidity facilities such as swap and repurchase agreement lines.
Investors are also watching whether the recent pullback in gold prices creates an opportunity for the central bank to begin accumulating bullion.
Gold futures, which traded above $5,600 per troy ounce earlier this year, have retreated to around $4,000 per ounce, leading some market participants to speculate that the Bank of Korea may view the decline as an attractive entry point.
“Whether it is better to buy when prices are falling or rising depends on market conditions,” a Bank of Korea official said. “Prices are lower than they were last year, so we are monitoring developments closely.”
The central bank has not increased its gold reserves since purchasing 20 metric tons in 2013. It currently holds 104.4 metric tons of gold, valued at $4.79 billion based on acquisition cost, representing 1.1% of South Korea’s foreign-exchange reserves at the end of June. The Bank of Korea reports its gold holdings at historical cost rather than current market value.
For years, policymakers resisted expanding gold holdings because bullion generates no interest or dividend income, requires storage costs and offers less liquidity than government bonds or other traditional reserve assets.
According to the Bank of Korea, the MSCI World Index, including dividends, returned 281% between March 2013 and March 2026, compared with a 196% gain in gold over the same period.
The central bank’s caution has also been influenced by its previous experience. After purchasing nearly 90 metric tonsof gold between 2011 and 2013, gold prices fell sharply, resulting in sizable unrealized losses and criticism that the Bank of Korea had bought near the market peak.
During his parliamentary confirmation process in April, Bank of Korea Governor Shin Hyun-song said future decisions on gold allocations would be based on reserve-management principles, trends in foreign-exchange reserves and conditions in global financial markets. He added that the bank would consider heightened geopolitical risks, uncertainty surrounding overseas investments and changing correlations among traditional assets while also evaluating investment vehicles beyond physical bullion, including gold exchange-traded funds.
