RBI Purchased 3 Tons of Gold in January: Reserves Reach 879 Tons Amid Market Uncertainty and Rupee Weakness

25 February, 2025
RBI Purchased 3 Tons of Gold in January: Reserves Reach 879 Tons Amid Market Uncertainty and Rupee Weakness

Winning Bizness Desk

Mumbai. Amid global economic uncertainty and rupee depreciation, the Reserve Bank of India (RBI) purchased 2.8 tons of gold in January. Last year, RBI had also acquired 72.6 tons of gold. Due to these consistent purchases, the share of gold in the country’s total foreign exchange reserves (forex reserves) has increased to 11.3% from 7.7% a year ago.

According to RBI’s latest data, as of the end of January 2024, India's total gold reserves have risen to 879 tons, marking an 8% increase compared to the previous year. On February 2, 2024, the country's gold reserves stood at 812.33 tons. Notably, this is the seventh consecutive year that the RBI has increased its gold holdings. Meanwhile, China also continued its gold purchases for the third straight month in January.

Three Reasons Why Central Banks Are Buying Gold

  • Hedge Against Inflation: Gold helps offset losses caused by inflation. Central banks worldwide face inflationary pressures, which erode the value of their currencies.

  • Safe-Haven Asset During Crisis: In times of crisis, gold prices tend to rise, making it a reliable investment for better returns during economic uncertainties. Recent geopolitical conflicts have boosted gold’s value significantly.

  • Risk-Free Investment: Gold is considered a safe asset, making it a preferred choice for central banks. When the dollar weakens, gold prices typically rise, making it an attractive investment option.

Gold Prices Have Increased by ₹10,194 Since January 1

Since January 1, 2024, the price of 10 grams of 24-carat gold has surged from ₹76,162 to ₹86,356, marking an increase of ₹10,194 as of February 24. Similarly, silver prices have risen from ₹86,017 per kg to ₹96,244, reflecting an increase of ₹10,227. In 2023, gold prices had climbed by ₹12,810.

Gold Could Reach ₹90,000 Per 10 Grams This Year

Ajay Kedia, Director of Kedia Advisory, suggests that after a major rally, gold experienced a correction, which has now stabilized. Interest rate cuts in the US and the UK, along with rising geopolitical tensions, are providing strong support to gold prices. Additionally, increased investment in Gold Exchange-Traded Funds (ETFs) is driving demand. Given these factors, gold prices could reach ₹90,000 per 10 grams by the end of the year.