Mumbai: The Reserve Bank of India (RBI) has made significant strides in its gold holdings, purchasing a remarkable 57.5 tonnes of gold during the financial year 2024-25. This move comes amid fluctuating financial markets and a surge in gold prices, which have increased by more than a third during a period characterized by global economic uncertainty.

This recent acquisition marks the RBIs second-highest volume of gold purchases in a single financial year since it began accumulating gold in December 2017. The unprecedented volatility in global markets, driven by geopolitical issues, fluctuations in the US Dollar, and uncertainties surrounding US government bonds, has led many central banks, including the RBI, to boost their gold reserves as a means of risk management.

As of March 2025, the RBI's total gold stock has reached an impressive 879.6 tonnes, an increase from 822.1 tonnes in the same period last year, according to the latest data released by the central bank. The previous highest purchase was recorded in the financial year 2021-22, where the RBI added 66 tonnes to its reserves. Other notable acquisitions were 35 tonnes and 27 tonnes in FY23 and FY24, respectively.

Since the election of Donald Trump as the US President in November 2024, the US Dollar has exhibited significant volatility, further enhancing the appeal of gold as a safe-haven asset. This trend aligns with the broader pattern observed globally, where central banks have increasingly turned to gold as a hedge against inflation and to mitigate risks associated with dollar fluctuations. Sajal Gupta, head of currencies and commodities at Nuvama, emphasized, All global central banks are reducing reliance on US Treasuries and shoring up gold reserves.

The World Gold Councils report on Gold Demand Trends for 2024 highlights the crucial role central banks play in global gold demand. Their purchasing behaviors are heavily influenced by ongoing economic and geopolitical changes. Notably, the proportion of gold in India's foreign exchange reserves rose to 11.8% as of April 11, 2025, compared to just 8.7% the previous year, underscoring the growing importance of gold in the nation's financial strategy.

Moreover, the RBI has benefited from the sharp rise in gold prices, which have surged over 30% in the past year, enhancing the valuation of its existing gold reserves. The Reserve Bank of India ranks among the top ten holders of gold in its foreign exchange reserves globally. Interestingly, unlike several other central banks, such as those of Turkey, Switzerland, or China, the RBI rarely sells its gold holdings due to the politically sensitive nature of such a decision.

The RBI articulated its strategy in its latest Half-Yearly Report on Management of Foreign Exchange Reserves, stating, While safety and liquidity constitute the twin objectives of reserve management in India, return optimization is kept in view within this framework. The purchase of gold allows the central bank to protect itself against currency volatility and the potential revaluation of its reserves.

However, recent trends indicate a potential moderation in the RBI's gold purchasing pattern. After averaging 6.6 tonnes per month from January to November 2024, the RBI paused its acquisitions in December and February, with purchases in January and March falling below the previous monthly average. A report from the World Gold Council suggested, 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.