Mumbai, Dec 6 (IANS): The Reserve Bank of India (RBI) bought 27 tonnes of gold during October taking its total purchases of the precious metal to 77 tonnes from January to October, according to a WGC report based on data compiled by the International Monetary Fund (IMF).
The RBI’s gold purchases in the first 10 months of 2024 represent a five-fold increase over the quantity of the precious metal bought in the same period of 2023, WGC said.
According to the data, the RBI’s total gold reserves have now gone up to 882 tonnes, of which 510 tonnes are held in India.
According to WGC, central banks of emerging economies continued to dominate the market in gold purchases with Turkey and Poland adding 72 tonnes and 69 tonnes, respectively to their reserves from January-October 2024.
These three central banks alone accounted for 60 per cent of total global net purchases reported this year, the WGC report added.
The RBI has, like other central banks, been buying gold as a safe-haven asset. The strategy of holding gold is primarily aimed at hedging against inflation, and reducing foreign currency risks, especially in times of uncertainty triggered by geopolitical tensions. These large purchases of gold by central banks have also been driving up prices of the precious metal in the global market.
More than half of the RBI’s gold reserves are held overseas in secure custody with the Bank of England and the Bank of International Settlements, while approximately a third is stored in the RBI’s vaults in Nagpur and Mumbai.
The Reserve Bank shifted 100 metric tonnes of its gold kept in bank vaults in the United Kingdom to its own vaults in India earlier this year as there was enough domestic storage capacity in the country. The shifting of the gold reserves is expected to result in a saving in the high fees that were paid for the use of vaults in the UK.
"In recent years, the data shows that the Reserve Bank is buying gold as a part of its reserves, and the quantum was going up. We have enough domestic storage capacity. Therefore, it was decided to move part of the reserve outside India to be stored within the country. That's it. Nothing more should be read into it," RBI Governor Shaktikanta Das had said in June.