Global Central Banks' Gold Rush: A New Force on the Horizon? South Korea's Central Bank Seeks to Break a Decade of Silence, May Increase Gold Holdings in the Medium to Long Term.

The Bank of Korea is considering increasing its gold reserves in the medium to long term, which would be the first time in over a decade that the bank has purchased gold. This move indicates that the Bank of Korea may join the global central banks' "gold-buying spree", which is one of the important forces driving the historical high gold prices. Heung-Soon Jung, Chief of Reserves Investment Department at the Bank of Korea Reserve Management Bureau, stated, "The Bank of Korea plans to consider increasing gold purchases from a medium to long-term perspective." According to Heung-Soon Jung, the last time the bank increased its gold holdings was in 2013. Heung-Soon Jung made these remarks at the London Bullion Market Association (LBMA) Precious Metals Conference held in Kyoto. His remarks were rare in revealing the central bank's attitude towards gold reserves. Despite central bank buying being an important driver of gold price increases in recent years, central bank officials rarely discuss the gold market in public. At the time Heung-Soon Jung made these remarks, the gold market had just experienced a sharp rise and fall. Last week, gold prices hit a historical record of over $4,380 per ounce, then suddenly reversed, showing signs of market overheating. Gold continued to fall on Monday, with spot gold falling by 3.2% to below $4,000 per ounce for the first time since October 10. Despite a significant retreat from historic highs, gold prices have risen by over 50% so far this year. Central banks buying gold and so-called "currency debasement trades" (investors selling sovereign bonds and currencies to hedge against the risks of widening fiscal deficits) have supported gold prices and attracted a large number of retail investors. Heung-Soon Jung stated that the Bank of Korea will closely monitor market trends to determine the timing and scale of gold purchases. Any decision will be based on changes in its foreign exchange reserves, as well as factors such as gold and Korean won trends. After buying gold in 2011-2013, the Bank of Korea faced criticism domestically because the price of gold entered a long downturn shortly after the bank's purchases. Since then, the bank has not increased its gold holdings - although the buying spree of other central banks in recent years has pushed up gold prices. At the same time, the surge in gold prices has led to some central banks increasing the proportion of gold in their reserves to levels that may prompt them to consider selling to rebalance their portfolios. On Monday, a Philippines central bank official stated that after gold accounted for about 13% of its reserves (above the ideal range of 8%-12%), the bank should consider selling some "excess" gold reserves. Heung-Soon Jung stated that the Bank of Korea's gold reserves are held in London, providing it with greater liquidity. Joaquin Tapia, Head of Foreign Reserves at the Bank of Mexico, who also attended the event, pointed out that the Bank of Mexico also prefers to store gold in London because it provides quality service and liquidity.