Gold feels like a relic. We pay with UPI, save in mutual funds, and measure wealth in numbers on a screen. So it is striking that the Reserve Bank of India, the institution that runs the modern rupee, has spent the last several years steadily buying a metal that pays no interest and does nothing but sit in a vault. In 2024 the RBI went a step further and physically moved 100 tonnes of its gold from the Bank of England's vaults in London back to India.

This is not nostalgia. It is a deliberate strategy, and India is far from alone in it. This guide explains, with the numbers, what the RBI actually holds and why a twenty-first-century central bank still treats gold as serious money. It is educational background, not advice to buy or sell anything.

Chapter 1

How much gold does the RBI actually hold?

As of September 2025, the RBI held about 880 tonnes of gold. That gold is not all in one place. Roughly 576 tonnes sat in India, about 290 tonnes were held abroad with the Bank of England and the Bank for International Settlements, and around 14 tonnes were held as gold deposits.

Where the RBI keeps its gold
575.8tIn India290.3tAbroad (BoE, BIS)14tGold deposits
Total about 880 t, September 2025. Source: RBI reserve report.

The RBI keeps most of its gold at home, and shifted 100 tonnes back from London in 2024.

That location split matters, and we will come back to why the RBI has been bringing gold home. But first, the bigger picture: the RBI has not just been holding gold, it has been accumulating it. Over the past decade, gold's share of India's total foreign exchange reserves has roughly doubled, from under 7% to about 15.6% by 2025. Part of that jump is simply the rising price of gold inflating the value of what the RBI already owns, but a large part is deliberate buying: the RBI added more than 57 tonnes in FY25, one of its largest annual purchases in years.

Gold is a growing slice of India's reserves
7%A decade ago10%A year ago15.6%2025
RBI gold as a share of total forex reserves. Shares approximate. Source: World Gold Council, RBI.

Gold has gone from a minor line item to roughly a sixth of India's reserves in about ten years.

Chapter 2

Is this an India-only story?

No, and that context is essential to understanding the RBI's behaviour. Central banks around the world have turned into voracious gold buyers. According to the World Gold Council, they bought a record 1,082 tonnes in 2022, followed by 1,037 tonnes in 2023 and 1,045 tonnes in 2024, three straight years above 1,000 tonnes. Buying eased to 863 tonnes in 2025 but stayed high by historical standards. Central banks have now been net buyers of gold every single year since 2010.

Central banks are buying gold like never before
255t2020463t20211082t20221037t20231045t2024863t2025
Global central bank net gold purchases per year. Source: World Gold Council.

After a quiet 2020, central bank gold buying tripled and has stayed elevated ever since.

Something clearly changed around 2022. To understand what, you have to understand what gold does for a central bank that ordinary currency reserves cannot.

Chapter 3

Reason one: gold is nobody's promise

Most of a central bank's reserves are held in other countries' currencies and government bonds, above all US dollars and US Treasury securities. Those are somebody else's liabilities. A dollar is a claim on the United States; a bond is a promise by a government to pay you back. That works well until it does not: the issuer can inflate its currency, default, or freeze your access.

Gold is different. It is not issued by any government and is nobody's promise to pay. Once it is in your vault, its value does not depend on another country's solvency or goodwill. For a central bank, this "no counterparty risk" quality is the whole point. Gold is the asset that is still yours when trust in everything else is shaky.

Chapter 4

Reason two: insurance against a dangerous world

This is what shifted in 2022. After Russia invaded Ukraine, Western governments froze a large part of Russia's foreign reserves that were held in dollars and euros. The lesson landed hard in capitals everywhere: reserves parked in another country's financial system can be switched off. Gold held in your own vaults cannot be frozen by a foreign government in the same way.

That single realisation helps explain both the global surge in central bank gold buying after 2022 and the RBI's decision to bring 100 tonnes home from London in 2024. Holding gold, and increasingly holding it domestically, is a form of geopolitical insurance. You hope never to need it, which is exactly why you keep it.

Chapter 5

Reason three: diversification and a hedge

Central banks, like careful investors, do not want all their eggs in one currency. If the bulk of your reserves is in dollars and the dollar weakens, your national savings shrink. Adding gold spreads that risk, because gold often holds or gains value precisely when major currencies or markets are under stress. It tends to move differently from stocks and bonds, which is what makes it useful as a stabiliser rather than as a source of income.

Gold also has a long history as a hedge against inflation and currency depreciation. Paper money can be printed without limit; gold cannot be manufactured at will, and its scarcity is part of why it has held purchasing power across centuries. For a country like India, where the rupee gradually loses value against the dollar over time, a gold reserve is a counterweight that does not erode in the same way.

Chapter 6

Reason four: confidence and stability

Finally, gold backs confidence in the rupee itself. A strong, diversified reserve, including a solid gold component, signals to markets, investors and other nations that India can defend its currency and meet its external obligations even in a crisis. This is not about returning to a gold standard; it is about resilience. When gold prices rose sharply through 2024 and 2025, the value of the RBI's gold reserves crossed 100 billion US dollars, strengthening the overall reserve position at exactly the kind of uncertain moment when strength matters most.

Chapter 7

What this means for you

You are not a central bank, and the RBI's reasons for holding gold are not automatically your reasons. It buys gold for national security, currency defence and reserve diversification on a scale and time horizon no household shares. So the lesson is not "copy the RBI and pile into gold."

The more useful takeaway is conceptual. Gold's enduring role in the world's most sophisticated financial institutions tells you something real about the asset: it is valued not for the income it produces, which is none, but for the risks it protects against, currency weakness, inflation, and moments when trust in the financial system frays. Understanding that is the difference between seeing gold as a get-rich bet, which it is not, and seeing it as insurance, which is closer to how the professionals treat it. How much of that logic, if any, applies to your own savings is a personal decision, ideally made with a qualified adviser and a clear head rather than a headline about record prices.

Disclaimer This is an educational guide, not financial or investment advice. Figures are drawn from the sources listed below and can change; verify current data before making any decision.This is an educational guide, not financial or investment advice. Figures are drawn from the sources listed below and can change; verify current data before making any decision.
Chapter 8

Sources