Gold’s share in India’s foreign exchange reserves rises over 209% since 2018

RBI’s gold holdings rise by 27.46 metric tonnes

As India’s foreign exchange reserves surpass $700 billion, the share of gold in the country’s forex reserves has surged by more than 209% since 2018. As of October 4, 2023, India’s gold reserves are valued at $65.76 billion, a significant increase from $21.15 billion recorded on December 7, 2018, according to data from the Reserve Bank of India (RBI).

Under the leadership of RBI Governor Shaktikanta Das, who took office in December 2018, India’s total foreign exchange reserves have increased by 78%, growing from $393.735 billion to $701.176 billion as of early October 2023.

The RBI’s gold holdings also saw a notable increase, rising by 27.46 metric tonnes to reach 822.10 metric tonnes in the fiscal year 2024. This year, the central bank repatriated over 100 tonnes of gold from the UK.

In terms of value, the share of gold in India’s total foreign exchange reserves rose to approximately 8.15% at the end of March 2024, up from 7.81% a year prior. Of the total gold holdings, 408.31 metric tonnes are held domestically, while 387.26 metric tonnes are stored with the Bank of England and the Bank for International Settlements (BIS).

Market analysts note that gold prices have remained strong, with gains of Rs.350 reported in the MCX, while Comex gold traded above $2,675, reflecting a 0.55% increase. Traders are positioning themselves based on expectations that the Federal Reserve will continue its strategy of interest rate cuts, which has maintained bullish sentiment around gold.

Since reaching record highs in September, gold prices have consolidated in the low-to-mid $2,600 per ounce range as traders anticipate a gradual pace of rate cuts. The ongoing geopolitical tensions in the Middle East have further increased the demand for gold as a safe haven, contributing to its upward momentum.

Analysts, including Jateen Trivedi from LKP Securities, suggest that as long as the Federal Reserve maintains a dovish stance and geopolitical risks persist, gold is likely to trade with a positive outlook.

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