RBI’s 57.5 tonnes of gold purchase second-highest in 7 years

Mumbai: The Reserve Bank of India (RBI) bought 57.5 tonnes of gold in FY25, adding to its stock of safe haven assets even as the yellow metal prices surged more than a third through a period of volatility in global financial assets.

This was the second-highest level of gold purchase in any financial year by the central bank after it started accumulating gold in December 2017.

Geopolitical risks, the US Dollar’s volatility, cloud over US government bonds have all contributed to bigger gold purchases, as many central banks looked to contain risks.

RBI’s total stock of gold was 879.6 tonnes as of the end of March 2025, up from 822.1 tonnes in the same period a year ago, the latest central bank data showed.

The highest gold purchase by the central bank was in 2021-22, when it bought 66 tonnes, followed by 35 tonnes and 27 tonnes, respectively in FY23 and FY24.

Significantly, the dollar has been very volatile since November 2024 after the election of Donald Trump as the US President, adding to the lure or gold.RBI’s gold purchase is in line with the global trend of central banks aggressively buying gold as it is a natural hedge against inflation and a safe asset especially when the dollar is volatile. Experts are also seeing central banks’ gold focus due to unattractiveness 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.

The World Gold Council’s Gold Demand Trends for 2024 notes that central banks continue to play a pivotal role in global gold demand, with their purchasing patterns influenced by economic and geopolitical shifts.

To be sure, the share of gold in India’s foreign exchange reserves has increased 11.8% as of April 11, 2025, from 8.7% in the same period a year ago. The central bank has also benefited from the rise in the valuation of its existing stock of gold because the prices surged over 30% cent during the year.

The Reserve Bank of India figures among the top ten holders of gold in its foreign exchange reserves. Significantly, unlike many other global central banks like its Turkish, Swiss or even Chinese counterparts, RBI seldom sells gold as it is a politically difficult decision. “While safety and liquidity constitute the twin objectives of reserve management in India, return optimisation is kept in view within this framework,” the Reserve Bank said in its latest “Half Yearly Report on Management of Foreign Exchange Reserves.”

Gold purchases help the central bank protect itself against currency volatility and the consequent revaluation of reserves. Yet recent trends suggest a moderation in the Reserve Bank of India’s gold buying. After consistently purchasing an average of 6.6 tonnes per month from January to November 2024, RBI took a breather in December and February. In January and March, its purchases were below the previous monthly average.

“This recent pattern in gold purchases may suggest a more measured approach f’rom RBI, although it underscores gold’s rising strategic importance in India’s reserves management,” a recent World Gold Council Report said.