As global central banks slow pace, the Reserve Bank is leading the increase in gold reserves

NEW DELHI: With its ongoing acquisition of gold reserves, the Reserve Bank of India (RBI) stands apart. The Reserve Bank of India’s weekly figures showed that in February alone, gold holdings increased by six tonnes.

With 817 metric tonnes of gold in total reserves as of today, this raises the RBI’s purchase total for the year to over 13 metric tonnes.
India has been steadily increasing its gold holdings as part of a drive to diversify its foreign exchange reserves and reduce the risks brought on by exchange rate volatility and economic unpredictability.

Even if India continues to be a major force in the world gold market, other central banks also played a part in February’s accumulation.
Global central banks kept adding to their gold holdings in February, although a little more slowly than they had the month before.
According to the World Gold Council, developing market banks—especially those in China and India—have been the main drivers of this trend.
The EMEA World Gold Council’s Senior Analyst, Krishna Gopal, published a study in the World Gold Council stating that worldwide central banks added 19 tonnes of gold to their holdings in February.
Even though there has been an increase for nine months running, this month’s growth has slowed significantly from January, when net purchases fell by 58%.
The general pattern of central bank purchases continues notwithstanding the slowdown. Although it’s significantly 43% lower than the similar month in 2023, year-to-date data for January and February indicates an addition of 64 metric tonnes, suggesting a fourfold rise compared to the same period in 2022.
Throughout the month, the People’s Bank of China (PBoC) was the biggest purchaser, adding 12 tonnes to its gold holdings.
But there were also prominent cases of selling within the general accumulating tendency.
Even if the rate of accumulation was slower in February, economists are still positive about the future of demand for gold from central banks.
The overall pattern shows that central banks are still interested in diversifying their reserve holdings, especially in light of the current geopolitical unrest and economic uncertainty.
Market watchers predict that the next Gold Demand Trends report, which will provide thorough insights on central bank demand for the whole first quarter of the year, will be released in late April.
All things considered, even if the pace may have slowed down in February, the general pattern indicates that central banks—including the RBI of India—remain dedicated to increasing their gold holdings as a tactical buffer against risks to the world economy.