Gold prices in the US have surged close to $3000 per ounce amid growing chatter that banks such as JP Morgan Chase and HSBC have started to airlift the gold they had stashed in the Bank of England vaults — and spooking commodity markets about a likely shortfall in physical gold to back trades.
The development — which gathered momentum over the past month — has also put the spotlight on the Reserve Bank of India which brought back more than 214 tonnes of gold in the past year from the vaults in Europe including those belonging to the BoE.
Will the RBI also start to sandbag its foreign exchange reserves — which have tumbled to $635.7 billion on February 14 from $704.9 billion last September in its effort to prop up a floundering rupee – by buying more gold and transporting it back to the country?
Gold is a safe haven commodity – and several central banks have been snapping it up as a hedge against the global uncertainties that have been wrought by US President Donald Trump’s protectionist policies.
On Monday, Comex gold (April 2025 delivery) was trading at $2,964.20 per ounce, an 11 per cent increase over the $2,669 per ounce price in early January.
In 2024, the Indian central bank brought back the metal in two consignments.
In May 2024, it brought back 100 tonnes to the domestic vaults. Another 102 tonnes arrived in October. At that time, the RBI had said the gold had been flown back as the Indian vaults had sufficient capacity.
At the same time, the RBI has also been purchasing the metal to diversify its portfolio and provide a cushion against currency volatility. It added 72.60 tonnes to its gold stock in 2024, the second highest after Poland which bought over 89.50 tonnes.
As of December 2024, its gold reserves stood at over 876 tonnes.
Observers said that any decision of the central bank to either bring back gold or purchase the metal will be determined by its policy of portfolio diversification and not guided by the actions of overseas banks. As per the latest RBI data, its gold reserves were valued at over $74 billion, up from over $66 billion prevailing during January 2025.