The Bank of Korea is preparing to buy physical gold for the first time in 13 years, marking a notable shift for a central bank that has stayed out of the market since its last purchase in 2013.

According to a South Korean news report published on August 3, the purchases would be made domestically, drawing from gold output that would otherwise have been destined for export markets. A Bank of Korea spokesperson told Central Banking on August 4 that the plan remains in its very early stages, with no decisions yet made on the timing or scale of any purchases.

The bank's head of reserves cited geopolitical risks as a key motivating factor behind the renewed interest in gold — a rationale consistent with the approach many central banks have taken in recent years as reserve diversification away from traditional holdings has gained momentum. Alongside the plan to resume buying, the Bank of Korea is also said to be considering diversifying the physical locations where it stores its gold reserves, a move that would align it with a broader trend among central banks seeking to reduce concentration risk in how and where reserves are held.

South Korea currently holds just over 100 tonnes of gold in its official reserves, a modest allocation relative to its total foreign exchange reserves, which rank among the world's largest at over $400 billion. That comparatively low gold share leaves the central bank with considerable capacity to expand its holdings, unlike some peers that have already built large positions.

The scale of the plan itself is small in absolute terms. South Korea produces an estimated 40 to 45 tonnes of gold annually, though most of this arises as a byproduct of copper and zinc smelting rather than dedicated mining. Of that total, only around 4 to 5 tonnes are typically sold abroad, and it is this modest slice of domestic supply that the central bank would be bidding for under the plan as it currently stands. That makes the prospective purchases far smaller than the scale of buying seen from some other central banks in recent quarters — countries such as China, Turkey, India, and Poland have each added tens or even hundreds of tonnes to their reserves over the past several years.

The timing coincides with a period of unusually strong central bank gold demand more broadly. Central banks bought a combined 289 tonnes of gold in the second quarter, the strongest second quarter on record, underscoring how widespread the shift toward gold as a reserve asset has become amid ongoing geopolitical uncertainty.

The move is symbolically significant given how long the Bank of Korea has stayed on the sidelines. However, with confirmation still at an early stage and no decisions on timing or size, the market impact for now sits more in sentiment than in actual demand. What will bear watching is whether the Bank of Korea eventually looks beyond the narrow domestic supply channel — which caps initial purchases at only a few tonnes — or whether the current framework signals a deliberately incremental approach to rebuilding its gold position.

Separately, Deutsche Bank sees gold's correction as largely done, holds a US$4,600 Q4 target.