Bank of Korea Purchases Refined Gold Bars for First Time in 13 Years

The Bank of Korea (BOK) said Monday it will partner with LS MnM, Korea Exchange (KRX), and Korea Securities Depository (KSD) to purchase domestically produced gold for the first time in 13 years via over-the-counter (OTC) transactions. The move comes as geopolitical risks have heightened South Korea’s need to diversify its foreign exchange reserves. LS MnM and Korea Zinc produce around 40 to 45 tons of gold annually as a smelting byproduct, with roughly 10% exported. The central bank noted it will consider using KRX’s trading and settlement systems and the warehousing facilities currently under development by KSD to purchase some of the exported gold, provided relevant companies submit applications. The BOK said it will arrange bulk transactions after prior consultations on price and volume to limit impacts on domestic gold prices, adding the new channel should reduce foreign exchange risks, as previous overseas gold purchases were paid in U.S. dollars. Additionally, the central bank acquired a small amount of gold ETFs in the second quarter. As of July, its gold holdings remained unchanged at 104.4 tons. South Korea’s foreign exchange reserves stood at $427.36 billion at the end of June, including $4.79 billion in gold reserves. (Jin10)