The Reserve Bank of India (RBI) added 72.6 tonnes of gold to its reserves in 2024, a fourfold increase from 2023, reflecting its strategy to diversify and mitigate currency volatility. Gold holdings rose to 876.18 tonnes, valued at $66.2 billion. This aligns with global central bank trends, as over 1,000 tonnes of gold were purchased worldwide in 2024. RBI's actions aim to reduce revaluation risks and strengthen reserves amidst economic uncertainties, with gold prices surging over 25% during the year.
The Reserve Bank of India (RBI) significantly increased its gold reserves in 2024, adding an impressive 72.6 tonnes of gold to its stockpile. This marked a fourfold increase compared to the incremental additions in 2023, positioning the RBI as one of the most active buyers of gold globally. Its purchases trailed only those of the central banks of Poland and Turkey in the same period, reflecting a strategic approach to reserve diversification amidst global currency fluctuations.
In 2024, the RBI's gold holdings rose to 876.18 tonnes, valued at 66.2 billion, compared to 803.58 worth 48.3 billion at the end of 2023. This substantial increase highlights the central bank's efforts to safeguard its reserves against currency volatility. Finance Minister Nirmala Sitharaman clarified in the Lok Sabha that the rise in gold reserves is part of a balanced reserve portfolio strategy and not an indication of a move away from the US dollar as a dominant settlement mechanism. "India's rising gold reserves, including those held by the RBI, are not intended to replace any international currency," she stated.
The RBI's move aligns with a global trend. Central banks collectively purchased over 1,000 tonnes of gold for the third consecutive year in 2024, with a notable 333-tonne acquisition in the fourth quarter alone. This surge in gold buying underscores the metal's appeal as a hedge against economic and geopolitical uncertainties. As IDFC Bank’s Chief Economist Gaura Sengupta explained, "The buying of gold by central banks is driven by the need to diversify assets in which forex reserves are held." Sengupta further noted that gold serves as a buffer against revaluation losses stemming from rising US Treasury yields and dollar strength.
Gold prices surged over 25% in 2024, providing significant valuation gains for central banks holding gold. For the RBI, this translated to mitigating revaluation risks and cushioning the rupee against currency volatility. "The diversification of forex reserves into gold is aimed at reducing the risk of revaluation loss," added Sengupta. This approach has gained momentum globally, particularly after the Russia-Ukraine war and the COVID-19 pandemic, as central banks increasingly view gold as a stable asset during volatile times.
India's foreign exchange reserves stood at 630.6billionasofJanuary31,2025, reflecting growth driven primarily by gold reserves, which increased by 630.6 billion as of January 31, 2025, reflecting growth driven primarily by gold reserves, which increased by 1.2 billion in the final week of January alone. The RBI’s strategy to accumulate gold since 2017 has become more pronounced in recent years, mirroring the global trend of proactive gold purchases by central banks.
The World Gold Council remains optimistic about this trend continuing. "In 2025, we expect central banks to remain in the driving seat," said Louise Street, Senior Markets Analyst at the council. With gold prices reaching record highs in early 2025, the RBI’s focus on gold as a secure and stable component of its reserves appears well-timed and strategic, ensuring resilience in the face of global economic and geopolitical challenges.
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