RBI joins gold rush as global central banks amass yellow metal

The Reserve Bank of India bought 7 tons of gold in September as central banks around the world bolstered their reserves of the precious metal, the World Gold Council (WGC) said in a report.

Central banks bought 77 tons of gold in September, with major buyers being from emerging markets. The People’s Bank of China added the most gold during the month at 26 tons, followed by the National Bank of Poland (19 tons) and the Central Bank of Uzbekistan (9 tons), the report said.

The Monetary Authority of Singapore, which added 1 ton of gold during the month, is the sole developed market bank that shored up its gold reserves, the report added.

RBI held 800.79 metric tons of gold, including gold deposits of 39.89 metric tons, as at the end of September, central bank data showed. While 388.06 metric tons of gold is held overseas in safe custody with the Bank of England and the Bank of International Settlements (BIS), 372.84 metric tons is held domestically, data showed.

In value terms, the share of gold in the total foreign exchange reserves decreased from about 7.81% as at the end of March to about 7.37% in end September, it added.

WGC data showed India’s gold reserves climbed gradually from 760.42 tons in the January-to-March quarter of 2022 to 787.40 tonnes in th last quarter of the year.

“Gold is viewed as a secure and liquid asset, safeguarding returns amid global uncertainty and surging inflation. The Ukraine-Russia conflict and central banks worldwide combating inflation have heightened these factors. We’ve observed central banks globally increasing their gold purchases,” Kunal Sodhani, a vice-president of foreign exchange and treasury at the Indian arm of South Korea’s Shinhan Bank, said.

Central banks have been amassing gold since last year, seeking refuge in the safe-haven asset while its price ascends, adding to its allure, analysts said.

“Geopolitical risks from the Russia-Ukraine conflict and sanctions by the US and Europe have been key drivers for this gold accumulation by global central banks,” Dilip Parmar, a research analyst at HDFC Securities, said.