Bank of Korea completes account setup for gold ETF investment after 13-year pause in gold buying

By Kim Byeo-ri, The Herald Business

The Bank of Korea has completed preparations to invest in overseas-listed physical gold exchange-traded funds, including opening the necessary brokerage accounts, it has emerged. With the central bank having made no gold purchases over the past 13 years, attention is now turning to whether it will meaningfully expand its gold-related asset holdings as central banks worldwide rapidly increase their gold allocations.

In a written response to a query on "gold ETF trading activity" obtained through People Power Party lawmaker Park Sung-hoon of the National Assembly's Finance and Economy Planning Committee, the Bank of Korea said it had "reviewed plans to diversify investment products beyond physical gold to include gold ETFs and other instruments as part of efforts to improve the efficiency of foreign reserve management, and has put in place the necessary conditions to do so."

Specifically, the central bank has completed internal procedures for gold ETF investment — opening a trading account, revising internal regulations and building the required systems — meaning it could invest in gold ETFs at any time depending on market conditions. On actual trading activity, however, the Bank of Korea was guarded. It said it does not disclose the trading status of foreign currency assets, including gold ETFs, out of concern that revealing its investment strategy could negatively affect the stable management of those assets.

Until now, the Bank of Korea had only gone as far as saying it was "reviewing gold ETF investment" — including at the confirmation hearing for Gov. Shin Hyun-song. Thursday marks the first time it has stated that the necessary conditions are in place.

The Bank of Korea also signaled the possibility of buying more physical gold, saying it is "reviewing an expansion of gold's share as part of efforts to diversify foreign currency assets." It added that "specific operational direction and investment instruments will be decided after monitoring the principles governing foreign reserve management, trends in reserve levels, and conditions in international financial markets."

The Bank of Korea's move to consider expanding gold investment reflects the metal's status as a safe asset. Increasing gold holdings would also reduce the foreign reserves' dependence on the dollar. Gold ETFs in particular track the price of physical gold while remaining immediately tradable on the market, giving them high liquidity and lower storage and custody costs compared with holding bullion directly.

The Bank of Korea last purchased gold in 2013, when it acquired 20 metric tons, and has made no additional purchases in the 13 years since, citing low liquidity and high volatility.

According to the World Gold Council, the Bank of Korea held 104.4 metric tons of gold as of end-2025, ranking 39th among central banks globally. As of the end of May, gold ($4.79 billion) accounted for just 1.1 percent of total foreign reserves ($426.99 billion). Because gold is recorded at its purchase price rather than current market price, the book value has remained unchanged since 2023.

As gold prices have surged in recent years and other central banks have raised their gold allocations, criticism — particularly from political circles — has mounted that the Bank of Korea has stood on the sidelines.

According to Investing.com, gold futures prices hovered around $2,000 per ounce in 2023 before surging past $5,000 in February this year. They have since retreated to just above $4,000, weighed down by concerns over US inflation stemming from the Iran war.

Global central banks have been raising gold's share of their reserve assets. According to the European Central Bank's report "The International Role of the Euro," released June 2, gold accounted for 27 percent of global central bank reserve assets as of end-2025, up 7 percentage points from 20 percent a year earlier. That surpassed the share held in US Treasuries (22 percent) for the first time in 29 years since 1996.

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https://biz.heraldcorp.com/article/10768064