Central Banks Expand Forex Portfolios with Gold Amid Record Prices, While RBI Reduces Purchases
Gold prices continue to soar to unprecedented levels, yet this surge has not deterred global central banks from increasing their gold reserves. According to the World Gold Council, central banks collectively added 15 tonnes of gold to their holdings in August, with the National Bank of Kazakhstan leading the way in purchases. Meanwhile, the Reserve Bank of India has notably reduced its gold acquisitions compared to the previous year, raising questions about future trends in gold buying among central banks.
Central Banks Increase Gold Reserves
In August, global central banks made significant strides in diversifying their foreign exchange reserves by adding a net total of 15 tonnes of gold. This data, compiled by the World Gold Council using statistics from the International Monetary Fund and various central banks, highlights a continued interest in gold as a stable asset amid fluctuating economic conditions. The National Bank of Kazakhstan emerged as the most active buyer during this period, reflecting a broader trend among central banks to bolster their gold reserves.
Despite the rising gold prices, which have reached record highs this year, central banks appear undeterred in their purchasing strategies. The World Gold Council noted that the overall figures for August align with the monthly net acquisitions observed from March to June, indicating a resurgence in buying activity after a stagnant month in July. This trend suggests that central banks are strategically positioning themselves to benefit from the ongoing increase in gold valuations, which stood at $3,429 per ounce at the end of August, marking a 31% year-on-year increase.
Reserve Bank of India’s Gold Purchases Decline
The Reserve Bank of India (RBI) has shown a marked decrease in gold purchases this year, having not acquired any gold for the second consecutive month in August. As of the end of August 2025, the RBI had purchased gold in only three out of eight months, a significant drop from the previous year when it regularly made monthly acquisitions. Reports indicate that the RBI’s total gold purchases for the January-August 2025 period reached just 3.8 tonnes, a stark contrast to the 45.4 tonnes acquired during the same timeframe in 2024.
As of August 29, the RBI’s gold holdings remained stable at 879.98 tonnes. The latest data reveals that gold now constitutes 13.6% of the RBI’s foreign exchange reserves, an increase from 9.3% the previous year. This shift indicates a strategic adjustment in the RBI’s approach to gold as part of its overall reserve management. The World Gold Council’s findings suggest that the recent slowdown in gold buying does not necessarily reflect a waning interest among central banks in gold as a reserve asset.
Market Dynamics and Future Outlook
The current surge in gold prices has created a complex landscape for central banks. While the rising valuations may limit some purchasing activities, they also present opportunities for strategic selling decisions. The World Gold Council has pointed out that despite the slowdown in buying, central banks remain committed to gold as a vital component of their reserves.
Madhavankutty G, chief economist at Canara Bank, noted that clearer insights into the Federal Reserve’s interest rate trajectory could lead to increased demand for gold. He emphasized that global uncertainties continue to support gold prices, and the limited supply of mined gold juxtaposed with steady demand will likely benefit central banks in the long run. As central banks navigate these dynamics, their strategies regarding gold acquisitions will be crucial in shaping their reserve compositions.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
