The Reserve Bank of India has ramped up its gold reserves, adding $19.14 billion worth of precious metal so far this fiscal amid a scorching rally in the prices due to high international and domestic demand. The surge in gold has been triggered by ongoing uncertainties relating to trade barriers, dollar’s weakness, bets on a Fed rate cut, ongoing Ukraine-Russia war and tensions in the middle east.
According to RBI’s data, India’s gold reserves increased to $98.770 billion as on October 3 as compared to $79.360 billion as on April 4, 2025. The gold reserves for India in terms of tonnage rose to 879.98 tonnes in Q2FY26 from 876.18 tonnes in Q4FY26 and 879.58 tonnes in Q1FY26, as per World Gold Council data.
India's foreign exchange reserves consist of foreign currency assets, gold reserves, the SDR (special drawing rights) and the reserve position in the IMF. Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.
Rush for Safe Haven
Since the beginning of the year, global uncertainties have increased, starting with tariff imposition by the US, India-Pakistan tensions, and the Iran-Israel unrest which led to a strong US military action. The events have put pressure on the dollar index, Brent crude prices and the Indian rupee, leading to an increased risk aversion among investors and central banks globally, thus moving to safer assets such as gold or gold reserves.
US Fed Chair Jerome Powell has signalled that the US central bank may deliver another quarter-point cut later this month. Lower yields tend to benefit precious metals, which do not have to pay any interest.
Read More: Gold tops $4,200 for first time on US-China trade tensions, Fed cut bets
Traditionally, investors have turned to gold as a shield against economic instability and inflation. In the US, inflation has been on the higher side for four years in a row, with the current levels well-above the two percent target set by the US Federal Reserve. To add to this, tariff-related volatility too has led to buying by global institutional investors as well as central banks.
What makes gold an attractive investment option is that the value of the yellow metal is not linked to any single economy or government decision. Read More
Festive Demand
Indian households have rushed to the safe haven this year, and the festive season has further fuelled the demand for physical gold.
“Looking ahead, trade developments with China will be a key factor to watch. In India, seasonal demand during Diwali and Dhanteras is also expected to influence domestic gold buying trends,” said Darshan Desai, CEO at Aspect Bullion & Refinery.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
