SEOUL: South Korea’s central bank said on Thursday that it bought 16 tonnes of gold in July as easing financial markets after a turbulent June allowed it to push ahead with efforts to diversify its massive foreign exchange reserves.
It put the total value of the purchase, which was made on multiple occasions during July and boosted its gold holdings to 70.4 tonnes, at $810 million, slightly less than $850 million it spent buying 15 tonnes of gold in November of last year.
“The markets were stable in July and we judged the conditions were good for us to make the purchase then,” said Lee Jung, head of the Investment Strategy Team at the Bank of Korea’s Reserve Investment Division.
Lee declined to provide the exact net purchase price per ounce it paid for the bullion, typical of most central banks, although he said price was not a major factor in the decision to make the purchases.
Calculations from the total value and volume of the purchase show that the Bank of Korea paid about $1,582 per ounce on average, compared with an average spot price of about $1,592 for the month.
Increased volatility in the global financial markets and falling confidence in the U.S. dollar have persuaded central banks to diversify their foreign reserves away from the U.S. currency and government debt securities.
Central banks became net gold buyers in 2010 for the first time in two decades and have remained buyers since, with an easing of prices this year helping the cause to accumulate more of the safehaven reserve asset.
South Korea is Asia’s fourthlargest economy and its foreign reserves of more than $300 billion ranked the seventh in the world and were equivalent to about 30 percent of its annual gross domestic product.
Gold accounted for 0.9 percent of the value of South Korea’s total foreign reserves at the end of July, up from 0.7 percent a month earlier, the central bank said.
The total book value of its gold holdings was at $3.0 billion, it added.
The South Korean central bank said it now ranked 40th in the world in gold holdings at the end of July, up from 43rd in June.
It announced the gold purchases when it made a scheduled release of the country’s latest foreign exchange reserves data, which edged up to $314.35 billion at the end of July from $312.38 billion at the end of June.
South Korea, the fourth largest economy in Asia, had the seventh largest foreign exchange reserves in the world as of the end of June, of which securities including government bonds made up 91.1 percent, it added. – Reuters