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The Reserve Bank of India (RBI) acquired 57.5 tonnes of gold during FY25, expanding its holdings of safe haven assets whilst gold prices increased by over one-third during a period of instability in global financial markets. The RBI’s gold acquisitions align with the worldwide trend of central banks actively purchasing gold, which serves as a natural inflation buffer and reliable asset, particularly during periods of dollar volatility.
This acquisition represents the second-largest annual gold purchase by the central bank since it began building its reserves in December 2017.
Multiple factors, including geopolitical uncertainties, fluctuations in the US Dollar, and concerns regarding US government bonds, have prompted many central banks around the world to increase their gold holdings to mitigate risks.
According to the latest central bank statistics, RBI’s aggregate gold holdings reached 879.6 tonnes by March 2025, increasing from 822.1 tonnes in the corresponding period of the previous year.
RBI’s largest gold acquisition occurred in 2021-22 with 66 tonnes, subsequently followed by purchases of 35 tonnes and 27 tonnes in FY23 and FY24 respectively, according to an ET report.
Notably, since November 2024, following Donald Trump’s election as US President, the dollar has experienced significant fluctuations, enhancing gold’s appeal.
Experts attribute central banks’ focus on gold to the diminishing appeal of US treasuries. “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.
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The World Gold Council’s latest trends report for 2024 highlights that central banks remain crucial drivers of global gold demand, with their acquisition strategies reflecting both economic conditions and geopolitical developments.
India’s foreign exchange reserves show an increased gold component, rising to 11.8% as of April 11, 2025, compared to 8.7% in the previous year. The central bank has gained from value appreciation of its existing gold holdings, as prices increased by over 30% during this period.
The Reserve Bank of India ranks among the top ten global central banks holding gold reserves. Unlike its counterparts in Turkey, Switzerland, or China, RBI rarely disposes of its gold holdings due to political sensitivities.
“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.”
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The central bank utilises gold acquisitions to safeguard against currency fluctuations and subsequent reserve revaluation.
However, recent data indicates a slowdown in RBI’s gold procurement. Following consistent monthly purchases averaging 6.6 tonnes from January to November 2024, the bank paused in December and February. Its acquisitions in January and March fell below previous monthly averages.
“This recent pattern in gold purchases may suggest a more measured approach from RBI, although it underscores gold’s rising strategic importance in India’s reserves management,” states a recent World Gold Council Report.
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