Amidst ongoing economic instability and depreciation of the rupee, the Reserve Bank of India (RBI) has expanded its gold reserves, purchasing 2.8 tonnes of gold in January. This follows last year’s significant acquisition of 72.6 tonnes. As a result, the share of gold in the central bank’s total foreign exchange reserves has risen to 11.3%, up from 7.7% recorded a year earlier.
India’s Gold Reserves Continue to Grow
According to RBI’s latest data, India’s gold reserves increased to 879 tonnes by the end of January 2025. This represents an 8% rise compared to the previous year. On February 2, 2024, the country’s total gold reserves stood at 812.33 tonnes. Notably, this marks the seventh consecutive year in which the RBI has increased its gold reserves. Meanwhile, China has also been expanding its gold holdings, purchasing gold for the third consecutive month in January.
Why Are Central Banks Buying More Gold?
Hedge Against Inflation
Gold serves as a safeguard against inflation. With global inflationary pressures affecting central banks worldwide, holding gold helps mitigate the erosion of currency value over time.
Safe Haven in Times of Crisis
During periods of economic or geopolitical turmoil, gold prices tend to rise, making it a reliable investment. Recent global conflicts have driven up gold prices, making it an attractive asset for central banks.
Stability Against Currency Depreciation
Unlike paper currency, gold retains intrinsic value and is considered a risk-free investment. When the U.S. dollar weakens, gold prices generally increase, further incentivizing central banks to boost their reserves.
Gold Prices Surge by Over Rs 10,000 in 2025
Since the beginning of 2025, gold prices have seen a significant rise. On January 1, the price of 10 grams of 24-carat gold stood at Rs 76,162, but by February 24, it had surged to Rs 86,356—a sharp increase of Rs 10,194. Silver prices have also followed suit, climbing from Rs 86,017 per kg to Rs 96,244, marking a gain of Rs 10,227. In comparison, during the entire year of 2024, gold prices increased by Rs 12,810.
Gold Expected to Reach Rs 90,000 Per 10 Grams
Ajay Kedia, director of Kedia Advisory, believes gold prices may continue their upward trajectory. Despite an initial dip following a strong rally, gold remains supported by multiple factors, including interest rate cuts by the UK and the U.S., rising geopolitical tensions, and increased investments in gold ETFs. Given these trends, experts predict that gold prices could reach Rs 90,000 per 10 grams in the near future.
