RBI has been on a gold buying spree, but it’s not alone! Several countries besides India are increasing their gold holdings significantly. Among countries that witnessed the most substantial increase in gold’s proportion of their total foreign exchange reserves between 2009 and 2024, Russia, Egypt, Argentina, Poland, and Libya lead the pack.Globally, central banks’ collective gold holdings grew from 26,000 tonnes to 32,000 tonnes during the 15-year period ending 2024, showing a compounded annual growth rate of 4.1%. Central banks acquire gold as a strategy to diversify their foreign exchange holdings and protect against inflation and currency value changes. Experts indicate that it serves as a reliable asset during periods of global uncertainty and political instability. These acquisitions have grown following the Covid-19 pandemic, particularly due to increased geopolitical tensions and border disputes.
Global central banks stock up gold
According to an ET report, these countries saw an expansion in gold reserves ranging from 800 to 2,700 basis points within their foreign exchange holdings. A basis point equals 0.01 percentage point.India’s gold holdings as a percentage of forex reserves increased by 450 basis points, rising from 6.9% to 11.4%, according to World Gold Council data.It’s important to note that these proportions require careful analysis, as increases might result from decreased forex reserves rather than actual growth in gold holdings.According to a Bank of Baroda analysis, the United States, Germany, Italy, France, Switzerland, Japan, Netherlands, China, Russia, and India represent the top 10 gold-holding nations. Collectively, they possess approximately 76% of all central bank gold holdings in 2024. This percentage has decreased from 81% in 2009, as developed nations have maintained relatively stable gold reserves.Also Read | India has the world’s 7th highest gold reserves! Why is RBI buying gold and how does it help the Indian economy?The United States maintains the largest gold reserves at 8,133 tonnes, which has remained constant over the past 15 years. The report notes that countries like France, Italy, Switzerland, the UK, and the Netherlands have also kept their bullion holdings largely unchanged during this period.The report further states that India has consistently increased its gold reserves since 2017, whilst China has been steadily building its holdings since 2014.
