RBI’s Strategic Move: 24 – tonnes Gold Reserve Increase in last four months

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RBI

RBI increased its gold reserves by 24 tonnes from January to April 2024, aiming to protect against market uncertainties due to geopolitical issues. This is higher than the 16 tonnes added in 2023. As of April 26, 2024, RBI held 827.69 tonnes of gold, up from 803.6 tonnes in December.

The increase in gold reserves is 1.5 times more than the amount added in all of 2023. While Indians love gold at home, the central bank hasn’t focused much on it. In 1991, RBI got heat for using some gold reserves in a currency crisis. In December 2017, RBI started buying gold more actively, especially in 2022 and now from January 2024.

The gold share in the total foreign reserves increased from about 7.75% in December 2023 to around 8.7% in April 2024. With rising gold prices, the central bank is gaining from valuation increases. Like other developing countries’ central banks, RBI is spreading its reserves to guard against currency fluctuations. Global uncertainty is leading many central banks to buy gold, with 290 tonnes added in the first quarter of 2024, making up a quarter of global gold demand.

Central banks are suggesting that in tough times due to global issues, diversifying strategically is crucial. Gold’s reputation as a stable asset is significant now. In 2023, central banks valued gold for crisis response, diversification, and its stability. As 2024 continues with uncertainty, the reasons for holding gold remain important.