India’s Gold Reserves Crossed $100 Billion Mark for the First Time

Posted 18 Oct 2025

2 min read

Article Summary

RBI is increasing gold reserves to diversify its forex portfolio, reduce dollar dependence, and hedge against inflation and global uncertainty. However, higher gold holdings bring risks like lower liquidity, no yield, and added storage costs.

According to the Reserve Bank of India's (RBI) latest foreign exchange reserves data, gold reserves have reached to $102.3 billion.

This has taken the share of the gold in the foreign reserves to nearly 15% from around 7% a decade ago.

Why is RBI increasing gold reserves?

Diversification: diversify foreign currency assets base and reduce dependency on the US dollar (de-dollarization).
Risk Mitigation: help protect against currency volatility and the resulting revaluation risks to its foreign exchange stockpile.
Hedge against Inflation: Gold is accumulated as a hedge against inflation, helping protect the purchasing power of India’s foreign reserves.
Safe Haven Asset: Gold is viewed as a safe investment during economic and geopolitical turmoil, providing a buffer during financial crises.

Risks associated with increasing gold in foreign reserves

Reduced liquidity: conversion of gold to cash is slower and costlier.
Zero Yield: Gold yields no interest unlike currency deposits.
Storage and security costs: Physical gold demands secure storage, increasing costs.

Components of Foreign Exchange Reserves

Foreign Currency Assets (FCA): These are maintained in currencies like the US dollar, euro, pound sterling, Australian dollar, and Japanese yen.
Gold Reserves held with RBI

Holdings with IMF
- Special Drawing Rights: An interest-bearing reserve asset created by the IMF to supplement members’ reserve assets.

Reserve Tranche Position (RTP): It is the difference between the member’s quota and the IMF’s holdings of the member’s currency that is readily available for withdrawal without strict conditions.