Key Points

The share of gold maintained by the Reserve Bank of India (RBI) in its foreign exchange reserves has almost doubled since 2021.

According to a report on Management of Foreign Exchange Reserves by the Indian central bank, the gold share in forex kitty, in dollar terms, rose from 5.87 per cent in March 2021 to 11.70 per cent in March 2025. In September 2024, the gold's share was at 9.32 per cent.

At the end of March 2025, the RBI held gold worth USD 77.793 billion in its forex kitty.

As of March 2025, the RBI held 879.59 metric tonnes of gold as against 695.31 metric tonnes in March 2021, the RBI data showed.

"As at end-March 2025, the Reserve Bank held 879.59 metric tonnes of gold, of which 511.99 metric tonnes were held domestically. While 348.62 metric tonnes of gold were kept in safe custody with the Bank of England and the Bank for International Settlements (BIS), 18.98 metric tonnes were held in the form of gold deposits," the RBI's Half Yearly Report on Management of Foreign Exchange Reserves published on May 5 read.

Sachin Jain, Regional, CEO, India, World Gold Council, said that factors such as de-dollarisation, trade sanctions, and inflation concerns, and most importantly the volatile geopolitical situation across the world prompted central banks to go for safe haven gold.

"There are many factors that has influenced gold buying, including that by central banks across the world. These include de-dollarisation, trade sanctions, and inflation concerns, but most importantly the volatile geopolitical situation across the world." Jain told ANI in a note.

Central banks have been net buyers of gold for the past fifteen years, but purchases have surged in the past three years, Jain added.

"...with over 1,000 tons bought each year since 2022 and 1,045 tons in 2024. Across the world, central banks are continuing to add to their gold reserves despite record-high gold prices, with 17 tonnes of net buying reported in March 2025," said Jain of WGC.

As global fragmentation continues, central bank buying, according to Jain, will remain a strong pillar of demand and shape the market's long-term dynamics.

The total gold holdings in its total foreign exchange reserves are highest -- both in quantum and share, Jain added.

"Over the past year, gold's share in the RBI's forex reserves has risen nearly 4 per cent, reflecting a net addition of 57.5t to its holdings. Yet recent trends suggest a moderation in the central bank's gold buying. After consistently purchasing an average of 6.6t per month from January to November 2024, the RBI took a breather in December and February. And in January and March its purchases were notably below the previous monthly average. 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," Jain of WGC added.

Historically, gold, as an asset, is considered to be a haven as it typically manages to retain or appreciate its underlying value in times of turbulence.

- ANI