This is happening for second time in 7 years…India is filling…, what is Modi govt’s plan?
New Delhi: In a major move, the Reserve Bank of India (RBI) has bought 57.5 tonnes of gold in the financial year 2024-25. Gold prices rose by more than a third during volatility in global financial markets. Hence, the RBI has increased its gold reserves as a safe asset. India’s bank regulator’s purchase matches the trend of central banks around the world buying the yellow metal. Notably, gold is considered a safe and reliable asset and protects against inflation. This purchase is the second-largest annual gold purchase by the central bank since the start of reserve creation in December 2017. Several central banks around the world have increased their gold reserves to reduce risk due to geopolitical uncertainties, fluctuations in the US dollar, and concerns about American government bonds.
As per the latest central bank data, the Reserve Bank of India (RBI) increased its gold reserves to 879.6 tonnes by March 2025, up from 822.1 tonnes the previous year. RBI’s gold purchases peaked at 66 tonnes in 2021-22, followed by 35 tonnes and 27 tonnes in subsequent fiscal years. Increased gold investment is attributed to significant dollar fluctuations since late 2024.
Focus On Gold Increased
Experts say that the central banks’ focus on gold is due to the declining appeal of US Treasuries. Sajal Gupta, head of currency and commodities at Nuwama, said, “All global central banks are reducing their dependence on US Treasuries and increasing their gold reserves.”
The World Gold Council’s 2024 Trends report highlights continued strong central bank demand for gold, influenced by global economic and political factors. India’s increased reliance on gold reserves is also noted, with the gold’s share of its foreign exchange reserves rising to 11.8% by April 11, 2025, up from 8.7% the previous year. This rise significantly boosted the value of India’s gold holdings due to a substantial increase in gold prices.
Included In The Top 10 Global Central Banks
The Reserve Bank of India (RBI), a top ten global holder of gold reserves, maintains a conservative approach to gold sales due to political considerations, unlike some other central banks. The RBI prioritizes safety, liquidity, and returns in managing its foreign exchange reserves, utilizing gold purchases as a hedge against currency volatility. However, after consistent monthly gold acquisitions through November 2024, RBI’s purchases slowed significantly in December, February, January, and March. This reduced purchasing activity, according to the World Gold Council, might signal a shift towards a more balanced strategy in the RBI’s gold reserve management.
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