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Bank of Korea buys gold-linked ETF shares for first time in 13 years

The Bank of Korea held 679,765 shares of SPDR Gold Shares worth about $250 million as of the end of the second quarter, after having no position three months earlier.

Reported · Written up by our desk · Precious Metals

South Korea’s central bank, the Bank of Korea, has bought gold-linked assets for the first time in 13 years, a move that aligns it with other reserve managers using gold as a hedge against geopolitical and economic uncertainty, LiveMint Markets reports. According to a filing with the US Securities and Exchange Commission, the Bank of Korea held 679,765 shares of SPDR Gold Shares worth about $250 million at the end of the second quarter. The filing also showed it did not hold shares of the world’s biggest physically backed gold exchange-traded fund three months prior.

The investment is described as the BOK’s first gold-linked purchase since 2013, and the bank said it does not increase its official bullion holdings because gold ETFs are classified as securities and sit within its foreign-exchange reserves rather than as physical gold. An economist at Hanwha Investment & Securities said the bank’s allocation to gold is currently low, adding there may be room for additional purchases.

Central banks have increased bullion buying to diversify reserves and seek safe-haven assets. The World Gold Council cited by LiveMint Markets said monetary authorities bought a net 289 tons of gold in the three months ended June, a record for a second quarter, while the BOK’s physical gold holdings were unchanged at about 104.4 tons since 2013.

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