The Reserve Bank of India (RBI) bought nearly half a tonne of gold in the last week of June after a relatively conservative spell of bullion shopping in the current fiscal year.
The RBI’s outstanding stock of gold amounted to 879.8 tonnes as of June 27, up from 879.6 tonnes in the previous week. This translates into fresh purchases of 4 quintals by the central bank during the week.
Gold has emerged as the fastest growing component of India’s foreign exchange reserves in recent years, with the value of the yellow metal climbing more than 80 per cent in the past 5 years. Its share in India’s foreign exchange reserves climbed to 12.1 per cent as of July 18, 2025, from 8.9 per cent as of July 19, 2024.
As a natural hedge against inflation, gold has found significant institutional backing lately. World Gold Council (WGC) data showed gold purchases by central banks topped 1,000 tonnes over each of the past three years, significantly higher than usual purchases.
“While safety and liquidity constitute the twin objectives of reserve management in India, return optimisation is kept in view within this framework,” notes the central bank’s latest report of foreign exchange reserves.
Although returns on gold were among the highest in India, the central bank seldom sells its gold holdings.
Significantly, the last time RBI had bought gold was in the last week of March, central bank data showed.
From an investment perspective with returns at 26 per cent in the first half of this calendar year, gold has earned among the highest returns for India, showed WGC estimates. Only returns in Turkey, in excesses of 40 per cent, were higher than in India.
Gold returns in India also exceeded those in advanced market currencies such as the pound, yen and euro or even the Chinese renminbi, even though China is one of the largest consumers of gold.
