South Korea's central bank is purchasing physical gold and storing it domestically after a 13-year hiatus from bullion acquisitions, according to an announcement August 3. The Bank of Korea expects to buy roughly 5 tons of gold and keep supplies at home rather than at the Bank of England, where it has held reserves historically.
The move marks a shift in how the central bank manages its gold reserve of 104.4 tons. Historical practice placed much of the world's central bank gold at the BoE's vaults in London, a storage arrangement that has been standard since the post-World War II monetary system. The BoK's decision to retain new purchases domestically breaks from that pattern.
Central banks have accelerated gold buying in recent years as geopolitical tensions and currency volatility drive demand for assets outside the traditional dollar-denominated reserve system. The International Monetary Fund reported in 2024 that central banks bought record quantities of gold, with acquisitions driven by diversification strategies and hedges against economic uncertainty. South Korea's purchase sits within that broader context, though the BoK did not issue a formal statement detailing its strategic rationale.
The BoK last purchased physical gold in 2011, when it bought 25 tons in a single transaction. That purchase expanded reserves from 79.1 tons to their current level. The resumption of buying after 13 years is a resumption by the central bank of its reserve composition activities, though the scale remains modest relative to the holdings of larger economies. The Federal Reserve holds roughly 8,133 tons; the European Central Bank holds about 12,079 tons.
Domestic storage reduces counterparty risk and custody fees but requires secure vault infrastructure. South Korea's central bank operates facilities for reserve assets, and the shift aligns with a pattern among peer central banks moving portions of reserves closer to home. France and Germany have similarly repatriated gold holdings from overseas vaults over the past decade.
The BoK's renewed interest in physical gold comes as spot prices for bullion reached record highs in 2026, driven by demand from central banks, wealth managers and retail investors hedging currency depreciation. The timing of the announcement coincided with a pullback in gold prices, falling roughly 1.8 percent in the week following the BoK's disclosure.
Whether the BoK will expand purchases beyond the expected 5 tons will depend on market conditions and the central bank's assessment of reserve adequacy. The number to watch is the total tonnage the BoK accumulates by the end of 2026.
