Why is RBI buying a lot of gold, see where India stands in the global gold buying race?

RBI: With the massive buying of central banks, several reasons are having a significant impact on the gold market.

Amidst the ongoing geopolitical tensions worldwide, central banks have significantly increased their gold purchases. In the current scenario, all countries’ central banks are trying to increase their gold reserves. In this regard, the RBI has reached the top spot in April-June 2024. The extent of this buying can be gauged from the fact that these banks have bought 483 tons of gold in the first six months of this year, setting a new record. Compared to the 460 tons of gold purchased in the first half of 2023, this is a 5% increase.

RBI’s Gold Purchase

If we talk about the first two quarters of this year, then in the second quarter, i.e., April-June, central banks around the world bought 183 tons of gold, which is 6% more than the previous quarter. However, this figure is 39% lower than the first quarter of this year. In the January-March quarter, central banks had bought 300 tons of gold.

Now, let’s see which countries’ central banks were the top gold buyers in the second quarter of this year. According to the data, the National Bank of Poland and the Reserve Bank of India jointly topped the list, with each buying 19 tons of gold. The Central Bank of Turkey stood third, buying 15 tons of gold, and has already bought 45 tons of gold in the first six months of this year. The central banks of Jordan, Qatar, Russia, Uzbekistan, Kyrgyzstan, Iraq, and the Czech Republic also bought a significant amount of gold in the second quarter. On the other hand, the Central Bank of China has reduced its gold purchases.

Impact of Gold Purchases on Prices

The massive buying by central banks is having a significant impact on the gold market, due to several reasons. The factors affecting the gold market include the movement of the US dollar, inflation, and the demand for gold jewelry. This year, the significant increase in gold prices is also due to central banks’ large-scale gold purchases. Additionally, the production of gold mining companies is being affected, which also impacts gold prices. The countries that produce gold include China, Australia, Russia, Canada, and the United States.