RBI Holds Off on Forex Gold Purchases in FY26 Likely Amid Price Surge and Global Uncertainty

The RBI has not added to its gold reserves in the first two months of FY26, holding steady at around 880 metric tonnes from the end of March through May 2025. This marks the longest pause in purchases in over a year, with the previous break occurring in the October–December 2023 quarter, when holdings stayed at 804 metric tonnes, as per recent reports.

This deliberate halt in accumulation may be linked to the current elevated price levels of gold. The yellow metal has surged nearly 80% over the past five years, driven by heightened geopolitical tensions and global economic volatility, as per The Times of India report.

WGC Survey: Central Banks Still Bullish on Gold

Despite the RBI's recent pause, central banks globally are showing increased interest in gold. The World Gold Council (WGC) released its 'Trends in Reserve Management 2024' survey in June, revealing that 95% of central banks expect global reserve managers to increase gold holdings in the coming year — a notable rise from 81% in 2023.

Survey respondents cited gold's resilience during crises, its portfolio diversification benefits, and its function as a long-term store of value as the top reasons for continuing gold allocations.

Gold as a Strategic Reserve Amid Geopolitical Risk

With rising concerns about the impact of geopolitical conflicts and the risk of financial sanctions, central banks are reassessing their reserve strategies. The RBI’s own Annual Report emphasised gold's role as a safe-haven asset, stating that its utility has grown amid growing global uncertainty.

Central banks typically split their reserves between:

• A liquidity tranche to meet immediate needs, and
• An investment tranche aimed at achieving higher returns over time.

In this framework, gold is increasingly seen as a secure fallback, especially when other reserve assets may be vulnerable to restrictions or market shocks.

Gold’s Share in RBI’s Foreign Assets Rises

Although new purchases have halted temporarily, the RBI’s report shows that gold’s share within India’s net foreign assets climbed to 12% at end-March 2025, up from 8.3% a year earlier. This shift reflects both past acquisitions and the rising value of gold itself.

Read More: RBI Foreign Exchange Reserves: Gold Holdings Rise 26% Since FY21.

Conclusion

The RBI’s decision to pause gold purchases amid rising prices appears to be a strategic move, possibly anticipating future opportunities. While the central bank holds back for now, broader trends suggest that gold remains a cornerstone of reserve management globally especially in a world shaped by uncertainty and policy risk.

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