2 weeks Ago By Amarmani Pal
During the financial year 2025, the Reserve Bank of India(RBI) acquired 57.5 tonnes of gold. The apex bank aims to expand its reserves of safe-haven assets at a time when gold prices surged by one-third amid global financial instability.
This acquisition is the second-largest annual gold purchase by the apex bank since it started building reserves in December 2017. The RBI's move aligns with the global trend of central banks actively buying gold, which helps in times of inflation and is a reliable asset during periods of dollar fluctuations. Global central banks are bolstering their gold reserves to mitigate risks amid geopolitical uncertainties, US dollar fluctuations, and concerns over US government bonds.
The Reserve Bank of India (RBI) is no exception, with its gold holdings increasing to 879.6 tonnes by March 2025 from 822.1 tonnes in the same period the previous year.
The RBI's gold purchases have been notable, with the largest acquisition of 66 tonnes in 2021-22, followed by 35 tonnes in FY23 and 27 tonnes in FY24, according to ET. The recent surge in gold's appeal can be attributed to the dollar's significant fluctuations since November 2024, following Donald Trump's election as US President. This trend underscores central banks' efforts to diversify their reserves and hedge against potential economic uncertainties.
"All global central banks are reducing reliance on US Treasuries and shoring up gold reserves," said Sajal Gupta, head of currencies and commodities at Nuvama. India's foreign exchange reserves indicate a higher gold content, going up to 11.8 per cent as of April 11, 2025, from 8.
7 per cent a year ago. The central bank has benefited from the appreciation in value of its gold holdings, with prices rising by more than 30 per cent during this time. The Reserve Bank of India is one of the world's top ten central banks to keep gold reserves.
Unlike the others in Turkey, Switzerland, or China, the RBI does not normally offload its gold due to political considerations. "While safety and liquidity constitute the twin objectives of reserve management in India, return optimisation is kept in view within this framework," states the Reserve Bank in its latest "Half Yearly Report on Management of Foreign Exchange Reserves." The central bank utilises gold acquisitions to hedge against currency oscillations and subsequent reserve revaluation.
"This recent pattern in gold purchases may suggest a more measured approach from the RBI, although it underscores gold's rising strategic importance in India's reserves management," states a recent World Gold Council Report. Get Latest News Live on Times Now along with Breaking News and Top Headlines from Budget 2025, Companies,Economy, Business Economy and around the world..
