Why Central Banks Are Stocking Up on Gold

In a significant trend observed over the past 15 years, central banks around the globe, including India's Reserve Bank of India (RBI), have been increasing their gold reserves at an unprecedented rate. From 2009 to 2024, global central banks' collective gold holdings surged from 26,000 tonnes to 32,000 tonnes, marking a compounded annual growth rate of 4.1%.

Leading Nations in Gold Reserves Expansion

Countries such as Russia, Egypt, Argentina, Poland, and Libya have seen the most substantial increases in gold's proportion of their total foreign exchange reserves. India's gold holdings, for instance, rose from 6.9% to 11.4% of its forex reserves, reflecting a strategic shift towards diversifying assets and safeguarding against global economic volatilities.

The Strategic Importance of Gold

Experts highlight that gold serves as a reliable asset during periods of geopolitical instability and economic uncertainty. The recent uptick in gold acquisitions, especially post the Covid-19 pandemic, underscores its role as a safe haven amidst rising tensions and border disputes.

Top Gold-Holding Nations

The United States leads with the largest gold reserves at 8,133 tonnes, followed by Germany, Italy, France, and others. Notably, the collective share of the top 10 nations has slightly decreased from 81% in 2009 to 76% in 2024, indicating a broader diversification among emerging economies.

This strategic accumulation of gold by central banks worldwide signals a cautious approach towards future economic challenges, emphasizing the metal's enduring value in national reserves.