India’s gold reserves have risen significantly as a proportion of its foreign exchange holdings over the past four years. According to a recent Reserve Bank of India report, the share increased to 11.70% by March 2025, up from 5.87% in March 2021.
As of the latest update, the RBI holds 879.59 metric tonnes of gold, an increase from 854.73 tonnes reported in September 2024. Approximately 58% of these reserves are stored within India, while the remainder is held abroad.
This move mirrors a broader global trend in which central banks are boosting gold allocations to diversify reserves and protect against inflation and currency volatility. Gold is often viewed as a long-term hedge and a safe-haven asset during periods of economic uncertainty. By increasing gold holdings, central banks aim to strengthen reserve portfolios and reduce reliance on any single currency or asset class.
For India, the growing share of gold in reserves reflects a strategic decision to balance the composition of foreign holdings. Holding a higher proportion of gold can provide stability when market conditions are turbulent or when fiat currencies face depreciation pressures. The mix of domestic and overseas storage also reflects considerations of security, liquidity and access.
While gold does not generate income like interest-bearing assets, its value retention over time and historical performance in crises make it a preferred instrument for reserve diversification. Central bank purchases contribute to demand in global gold markets and can influence market dynamics, though such decisions are typically guided by long-term reserve management strategies rather than short-term price movements.
Overall, India’s increasing allocation to gold signals a cautious approach to reserve management, aiming to enhance resilience against economic shocks and preserve the purchasing power of its foreign exchange holdings.