The Reserve Bank of India (RBI) has successfully repatriated 102 tonnes of gold from the Bank of England, reinforcing India's domestic reserves as geopolitical tensions increase the demand for secure assets. This move, timed around the Dhanteras festival, highlights the RBI's strategic efforts to bring more of India’s gold reserves closer to home, safeguarding against global risks.
RBI’s Strategic Shift in Gold Storage
In a confidentially conducted and highly secure transfer, the RBI brought 102 tonnes of gold back to Indian soil, signaling a shift toward securing assets domestically. With this latest addition, India’s total gold reserves stand at 855 tonnes, of which 510.5 tonnes are now stored within India. This repatriation follows a similar transfer in May, when 100 tonnes were moved from the UK to India, marking one of the largest gold repatriations since the 1990s. Since September 2022, India has reclaimed a total of 214 tonnes from abroad, showcasing a focus on asset security rather than collateralization.
Gold Repatriation and India's Foreign Reserves
Despite maintaining 324 tonnes in the Bank of England and the Bank for International Settlements—institutions favored for secure storage and liquidity in London’s bullion market—India’s recent actions suggest a strategic shift. As of now, gold represents 9.3% of India’s foreign reserves, up from 8.1% in March. Rising global tensions, including conflicts in the Middle East, have further fueled the demand for gold, contributing to price hikes in Mumbai, where the metal currently trades at ₹78,745 ($936.50) per 10 grams. Forecasts indicate prices could reach ₹85,000 per 10 grams by 2025, as investors increasingly turn to gold for stability.
Indian Consumers Drive Gold Demand Amid High Prices
Despite record-breaking prices, Indian consumers showed strong demand for gold during the recent Dhanteras and Diwali festivals, buoyed by expectations of future price gains amid a slowing stock market. Saurabh Gadgil, chairman of PNG Jewellers, noted significant interest in gold and silver coins and bars, with many viewing these metals as promising alternatives to equities. This sustained demand has raised concerns about a potential increase in India’s trade deficit, putting additional pressure on the rupee as the nation continues to prioritize gold as a secure asset amid global uncertainties.
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