Gold's Share in India's Forex Reserves Rises Over 209% Since 2018

As India's foreign exchange reserves crossed $700 billion, the share of gold in the forex kitty of the country has increased by over 209 per cent since 2018.

India's gold reserves stand at $65.76 billion as on October 4, compared to $21.15 billion as on December 7, 2018, according to the data made available by the Reserve Bank of India (RBI). Shaktikanta Das assumed the RBI office in December 2018.

During his tenure, forex also surged by 78 percent. The entire foreign exchange reserves of the country stood at $701.176 billion (as on October 4) as against $393.735 billion on December 7, 2018.

According to its "Half Yearly Report on Management of Foreign Exchange Reserves", the gold holding by the central bank has risen by 27.46 metric tonnes to 822.10 metric tonnes in FY24.

It also imported more than 100 tonnes of gold from the UK this year.

In value terms (USD), the proportion of gold in the overall foreign exchange reserves rose to about 8.15 per cent as at end-March 2024 from about 7.81 per cent as at end-March 2023.

Domestically 408.31 metric tonnes of the total gold deposits were held, whereas 387.26 metric tonnes were kept in safe custody in the Bank of England and BIS.
The experts hint that the precious metal gold's price increased on Wednesday. Rs 350 gains were mentioned in MCX while Comex gold traded more than $2,675 with a gain of 0.55 percent.

Traders continue to position themselves on expectations that the Federal Reserve will continue on its path of cutting interest rates. This has kept bullish sentiment around the yellow metal which spiked to record highs in September.
Since then, gold has been consolidating in the low-to-mid $2,600 per ounce range as traders expect a slower pace of rate cuts from the Fed.

Further adding to the safe-haven demand for gold, the geopolitical situation in the Middle East has further strengthened the upward momentum of the metal.

So long as there is dovish sentiment by the Federal Reserve and geopolitical risks continue to pose a threat, trading with a positive bias shall continue in gold, said Jateen Trivedi from LKP Securities.