RBI Increases Gold Reserves; In November 2024, the Reserve Bank of India (RBI) added eight tonnes to its gold reserves, reflecting a broader trend among central banks around the world. According to the latest report by the World Gold Council (WGC), central banks collectively bought 53 tonnes of gold during the same month, which coincides with a drop in gold prices after the US election.
RBI Increases Gold Reserves With Strategic Purchases
The RBI has actively participated in accumulating gold as a safe-haven asset. The rationale behind this strategy is to hedge against inflation and mitigate risks associated with foreign currencies, especially in times of geopolitical uncertainty. The recent purchase of eight tonnes takes RBI’s total gold acquisitions to 73 tonnes in the first 11 months of 2024, making it the second-largest buyer of gold this year after Poland.
Global central bank buying spree
Gold buying has surged globally as various central banks have accelerated their acquisitions. The People’s Bank of China (PBoC) resumed gold purchases after a six-month hiatus, adding five tonnes to its reserves, which now total 2,264 tonnes. The Monetary Authority of Singapore was a notable seller this month, reducing its reserves by five tonnes, taking its total reserves to 223 tonnes.
RBI’s gold reserves rise significantly
RBI’s recent activities have led to a significant increase in its total gold reserves, which now stand at 890 tonnes, of which 510 tonnes are stored in India. Notably, the central bank’s purchases in 2024 have increased five times increased fivefold in 2023, underlining its aggressive strategy.
Central Banks’ Impact on Gold Prices
The rising demand for gold from central banks has contributed to the rise in prices in the global market. Purchases from Poland (21 tonnes) and Uzbekistan (nine tonnes) have further demonstrated the broader trend of central banks investing in gold.
Domestic Storage and Cost Savings
Over half of the RBI’s gold reserves are currently held overseas in secure vaults with the Bank of England and the Bank of International Settlements. However, the RBI will move 100 metric tonnes of gold previously stored in the UK back to its vaults in India in 2024. This strategic move was facilitated by adequate domestic storage capacity and is expected to result in significant cost savings by eliminating high charges associated with external vault services.
RBI Financial Education Initiative for Visually Challenged Person
The RBI’s proactive stance on gold accumulation emphasises the strategic importance of this precious metal in the central bank’s overall risk management and asset diversification efforts. As central banks globally continue to invest in gold, market dynamics and price trends will likely evolve, reinforcing gold’s role as a vital asset in times of economic uncertainty.