- Central banks bought nearly $84 billion in gold in 2024 alone, nearing the 16-year total between 2000 and 2016.
- India’s RBI holds 880 tonnes of gold but is currently holding off on further purchases amid high prices.
- Gold mutual funds outperform all other investment categories with over 33% annual returns.
A dramatic surge in global gold demand is underway as central banks increasingly pivot away from the US dollar, viewing gold as a safer and more stable reserve asset.
India’s Reserve Bank currently maintains 880 metric tonnes of gold in reserves but has paused fresh acquisitions in FY26. This restraint is likely a response to soaring gold prices, which have climbed more than 80% in five years.
Central Banks Turn to Gold as Global Trust in Dollar Wanes
The rapid accumulation of gold by central banks reflects a larger strategic recalibration. Once reliant on the dollar-heavy reserve system, emerging and developed nations alike are adopting gold to shield against external shocks. Countries like China, Turkey, and Russia have been particularly active in building their gold reserves as part of broader de-dollarization efforts.
While the global reserve currency landscape is shifting, no single contender has emerged to fully replace the dollar. The euro continues to be hampered by fiscal inconsistencies within the EU, while the Chinese yuan, despite growing trade influence, lacks the transparency and accessibility required for wide-scale adoption. This vacuum strengthens gold’s appeal as a neutral, universally accepted asset.
Domestically, India is showing signs of financial resilience. Elevated operating cash flow margins among Indian companies point to strong earnings quality and prudent capital allocation. With interest rates stabilizing and inflation largely under control, investors are increasingly looking to gold not just as a hedge, but as a reliable growth asset.
Despite a minor dip in prices on July 7—where gold traded at ₹96,485 per 10 grams—market sentiment remains bullish. Investor appetite is being fueled by ongoing uncertainty in global equity markets and a rising distrust of fiat-backed securities. The consistent performance of gold and silver funds demonstrates a clear pivot toward tangible assets in the face of economic unpredictability.
Gold’s ascent reflects more than market momentum—it signals a broader rethinking of what constitutes financial safety in a rapidly changing world. Central banks and investors alike are choosing stability over speculation.
“Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.” — Alan Greenspan
