Why the RBI Keeps Buying Gold in 2025 and Beyond
The RBI is ramping up gold reserves amid global volatility. Discover why India is betting big on gold for economic security.
India’s Gold Rush: RBI’s Bold Bet in a Volatile World
On Akshaya Tritiya, as millions of Indians flock to buy gold for spiritual and financial prosperity, a quieter but more strategic accumulation is happening behind the scenes. The Reserve Bank of India (RBI), the nation’s financial guardian, has been steadily increasing its gold reserves — a move that signals much more than tradition. It reflects a broader, calculated response to an unpredictable global economic landscape.
In a world rocked by pandemic fallout, geopolitical upheaval, and mounting financial instability, central banks are turning to gold with renewed conviction. And India is among the frontrunners in this global pivot.
RBI’s Growing Appetite for Gold: The Numbers Speak
In fiscal year 2024–25 alone, the RBI snapped up 57.5 tonnes of gold — its second-highest annual haul in nearly a decade. This aggressive accumulation isn’t new. Over the past five years, India’s gold holdings have surged by 35%, climbing from 653 tonnes in 2020 to 880 tonnes as of March 2025, according to World Gold Council data.
This strategic buildup has also lifted India’s rank in the global gold pecking order. Once placed tenth, the country now holds the seventh-largest gold reserve in the world. More significantly, the metal now accounts for over 11% of India’s total foreign exchange reserves — nearly double the share it held just four years ago.
Gold Over Greenbacks: What’s Driving the Shift?
The primary driver? Volatility in the U.S. dollar.
“Over the past few years, the dollar has been anything but stable,” explains Madan Sabnavis, Chief Economist at Bank of Baroda. “Gold, on the other hand, has historically served as a robust hedge during turbulent times.”
The dollar index, which measures the greenback against a basket of global currencies, has slipped dramatically — from nearly 110 at the start of 2025 to below 100 in recent weeks. For central banks managing trillions in reserves, such swings pose significant risks. Gold, which doesn’t rely on any one nation’s fiscal health, offers a more neutral store of value.
“The RBI’s increased gold purchases reflect a prudent diversification strategy,” says D.K. Srivastava, Chief Policy Advisor at EY India. “It’s about rebalancing risk, especially with U.S. treasury yields fluctuating unpredictably.”
From London to Home Soil: The Repatriation Drive
Since late 2022, the RBI has brought back over 214 tonnes of its gold reserves from overseas storage, primarily the UK. This move isn’t merely logistical; it’s symbolic of a deeper shift in India’s financial sovereignty strategy.
By holding gold domestically, the RBI enhances transparency and secures quicker access in times of need — a consideration made more urgent by rising geopolitical strains and global supply chain disruptions.
“This is more than just gold,” says Sachchidanand Shukla, Group Chief Economist at L&T. “It’s about reinforcing India’s economic foundation with an asset that transcends borders and currency wars.”
Gold, the Rupee, and the Future of Trade
India’s strengthening gold reserves could also fuel its ambitions to globalize the rupee. With platforms like UPI expanding internationally and growing pressure to de-dollarize trade, a solid gold base adds credibility and confidence to these efforts.
“As global crude prices decline and the dollar’s dominance wanes, India stands to gain from expanded trade settlements in local currency,” Srivastava notes. “And the RBI’s dividend payout to the government may also see an uptick.”
The timing couldn’t be better. With gold prices hovering near all-time highs, analysts believe central banks will continue to bolster their bullion holdings, viewing it as a long-term shield against inflation, conflict, and fiscal instability.
Conclusion: Gold Isn’t Just a Commodity — It’s a Strategy
As gold glitters on the wrists and in the vaults of millions of Indians today, its strategic value for the nation is shining even brighter. The RBI’s gold-buying spree isn’t just about guarding wealth — it’s about reimagining India’s role in a new, multipolar financial world.
With the dollar showing cracks and global alliances in flux, gold offers not only stability but also leverage. As India deepens its gold reserves, it’s not merely storing metal — it’s storing trust, resilience, and a quietly powerful form of independence.
Disclaimer:
This article is for informational purposes only and does not constitute financial advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
source : The Economic Times