Bank of Korea buys more gold in November
Korea's central bank said Wednesday it increased its holdings of gold in November, the second time this year, in a bid to diversify its portfolio of foreign exchange reserves.
Korea purchased 14 tonnes of gold, raising the country's gold holdings to 84.4 tonnes valued at US$3.76 billion at the end of November, according to the Bank of Korea (BOK).
The move marked the BOK's fourth purchase of the precious metal since the bank bought it in July last year for the first time in 13 years. It also bought gold in November 2011 and July.
"The gold purchase aims to diversify the FX reserves and investment risks," said Lee Jung, the head of the investment strategy team at the BOK's Reserve Management Group.
Lee declined to comment on the purchasing prices and future buying plans, citing their possible impacts on the market.
The BOK's move came as the grim economic outlook and the protracted eurozone debt crisis are raising investors' appetite for safe assets.
The BOK estimated that the additional purchase would put South Korea at the 36th spot in the world in terms of gold holdings, up from the 40th ranking tallied at the end of September.
Amid ample liquidity worldwide, gold is widely viewed as a way to hedge inflation risks and the bleak global economic outlook makes gold more attractive as a safe asset.
The BOK has been making efforts to diversify its foreign exchange reserves by reducing the weight of its U.S. dollar-denominated assets. Gold bullion accounted for 1.2 percent out of the total reserves as of the end of November, up from 0.9 percent the previous month.
Korea's foreign exchange reserves rose for the sixth straight month in November on the back of increased profit investment, reaching a record high $326.09 billion, up $2.63 billion from the previous month, the BOK said.
Foreign reserves consist of securities and deposits denominated in overseas currencies, along with International Monetary Fund reserve positions, special drawing rights and gold bullion.
As of the end of October, Korea was the world's seventh-largest holder of foreign exchange reserves. (Yonhap)