By Polina Devitt
KYOTO (Reuters) -South Korea’s central bank is considering gold purchases for reserves in the medium-to-long-term, Heung-Soon Jung, head of reserve investment division at the Bank of Korea told a precious metals conference on Tuesday.
South Korea has not bought any gold to add to its 104 metric tons of reserves since 2013, in contrast with some other central banks, such as China’s, which have been active buyers since 2022 to diversify their reserves, supporting the gold price.
The timing and scale of possible purchases will depend on the trajectory of its domestic currency and gold prices, Heung-Soon Jung told the London Bullion Market Association’s annual conference in Kyoto.
LONDON REMAINS TOP CHOICE FOR GOLD RESERVE STORAGE
South Korea stores its gold in London, which remains the most popular option for central banks that do not want to keep their reserves at home.
“London is the centre of gold trade. It’s very easy to access gold-related trade,” he said.
While it remains a go-to location, Bern and New York are other popular locations, Jaime Cortina, head of treasury at the Bank for International Settlements, the central bank umbrella group, told the conference.
China is another country that is aiming to become a custodian of foreign gold reserves to strengthen its standing in the global bullion market, Bloomberg reported last month.
When asked about China’s potential appeal as a custodian location, Joaquin Tapia, head of foreign exchange reserves at the Banco de Mexico, told the conference: “It would have to be a very competitive offer for us to consider moving our bars from London to China.”
The London spot market experienced a tight spell in early 2025 caused by massive outflows to the United States amid fears of import tariffs, but it proved short-lived after gold borrowed from central banks quickly boosted liquidity.
“The official sector does not tolerate a disorderly gold market,” said StoneX analyst Rhona O’Connell, and this quality helps the London OTC market when it needs this supply of last resort.
Annual net purchases of gold by central banks have exceeded 1,000 tons each year since 2022, according to an estimate by consultancy Metals Focus. It expects them to buy 900 tons this year, still twice the 2016-2021 annual average.
(Reporting by Polina Devitt; editing by Veronica Brown and Tomasz Janowski)
