Reserve Bank of India's Gold Purchases
The Reserve Bank of India (RBI) increased its gold reserves by purchasing nearly half a tonne of gold in the last week of June, marking a significant acquisition after a period of conservative gold buying.
Gold Reserves
- Current Gold Reserves: As of June 27, the RBI's total gold reserves stood at 879.8 tonnes.
Trends in Gold as a Foreign Exchange Reserve
- Growth: Gold is one of the fastest-growing segments of India's foreign exchange reserves, with its value rising over 80% in the last five years.
- Share in Reserves: Gold's share in India's foreign exchange reserves increased to 12.1% by July 18, 2025, from 8.9% on July 19, 2024.
Global and National Context
- Institutional Backing: Gold acts as a natural hedge against inflation and has gained significant institutional support.
- World Gold Council (WGC) Data: Central bank gold purchases have exceeded 1,000 tonnes annually over the past three years, much higher than usual.
- Investment Strategy: The RBI prioritizes safety and liquidity in reserve management, while also considering return optimization.
Gold Returns
- High Returns: Gold returns in the first half of the calendar year were 26%, one of the highest for India, only surpassed by Turkey's returns exceeding 40%.
- Comparison with Other Currencies: Gold returns in India outperformed those of advanced market currencies such as the pound, yen, euro, and the Chinese renminbi.
