Are Koreans also joining the gold rush?

The Bank of Korea, which has not bought gold for 10 years, suddenly wants to buy gold?

This Tuesday, the Bank of Korea unexpectedly stated that with the growth of foreign exchange reserves, the Bank of Korea is considering buying more gold in the medium to long term.

This is the first time in over 10 years that the Bank of Korea has expressed its intention to buy gold.

The last time the Bank of Korea made large-scale gold purchases was in 2011, when gold was also at a historical high. At that time, the Bank of Korea continued to buy over $1 billion worth of gold due to global economic growth and uncertainty in European sovereign debt. It wasn't until 2013 that the Bank of Korea stopped its gold buying program.

As of the end of March this year, out of Korea's $419.3 billion in foreign exchange reserves, the gold reserves amount to 104.4 tons, valued at $4.8 billion, accounting for approximately 1.1%.

Kwon Min-soo, head of the Bank of Korea's Foreign Exchange Reserve Management Group, stated this week that caution is needed when investing in gold. The benefits of investing in gold include hedging against inflation and serving as an alternative to the US dollar, but the timing of purchases must be well managed.

"We currently do not have immediate plans to buy gold, as we need to weigh various factors to ensure the right timing for purchases. Only when foreign exchange reserves show sufficient growth trends and the foreign exchange market is stable, will we consider buying more gold as an asset. This is why we are only considering buying gold in the medium to long term."

Translated, this means that the Bank of Korea will continue to buy gold as long as it ensures that the price of gold will continue to rise in the future.

The Bank of Korea's rare statement on gold comes after the spot gold price hit a historic high of $2,431 per ounce in April. Previously, escalating tensions in the Middle East prompted investors to seek safe-haven assets, driving the continuous rise in gold prices, which have already risen by over 10% this year