This Dhanteras, the Reserve Bank of India (RBI) announced a significant transfer of gold reserves, relocating 102 tonnes from the Bank of England’s secure vaults to storage facilities within India.
As of late September, RBI’s total gold reserves reached 855 tonnes, of which 510.5 tonnes are now stored domestically. This adjustment marks a notable change in RBI’s approach to asset security, reflecting the bank’s reassessment of its foreign reserves amidst global uncertainties. The decision to bring more reserves back to India aligns with a growing trend among central banks to prioritise the safety and accessibility of their gold holdings amid shifting global dynamics.
With this transfer, India fortifies its economic defences, ensuring that a larger portion of its reserves remains readily accessible within its borders should the need arise to leverage these assets in times of global financial instability.
Notably, 324 tonnes of the nation’s gold reserves remain under the custodianship of two major financial institutions in the United Kingdom: the Bank of England and the Bank for International Settlements.
The Bank of England, known for its secure “bullion warehouse,” has been pivotal in safeguarding global central bank gold holdings since 1697. Located in London, it offers access to the liquid bullion market, providing central banks worldwide with unique advantages in trading and liquidity. At present, no additional shipments of Indian gold out of England are anticipated for the remainder of the year.
This continued offshore custodianship coincides with a shift in India’s overall foreign reserve composition. Gold now constitutes 9.3 per cent of India’s reserves, a notable rise from the 8.1 per cent recorded in March. This increase reflects a broader global trend where investors are seeking the stability of gold amid rising economic uncertainties and geopolitical tensions.
Notably, the Middle East’s recent conflicts have further intensified the appeal of gold as a safe-haven asset, a move mirrored by central banks and individual investors alike.
In India’s domestic markets, the price of gold has seen a significant surge, currently standing at Rs 78,745 per 10 grams in Mumbai. Analysts are forecasting further price increases, with estimates suggesting a potential climb to Rs 85,000 per 10 grams in the coming year, driven by sustained demand. These price trends align with the growing investor inclination toward gold as a hedge against volatility and geopolitical instability.
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