In the India’s gold market update, Rally and demand realignment report, Kavita Chacko, Research Head, India-WGC, said, two points,
1: RBI moderates’ gold buying but gold’s role in reserves strengthens,
2: Turnaround in imports.
In the context of RBI, report said, the RBI added a modest 0.6t of gold to its reserves in March, resuming purchases after a pause in February, according to our estimates based on the central bank’s weekly forex reserve data. This brings the RBI’s total gold holdings to 879.6t, or 11.7% of its total foreign exchange reserves – the highest level both in quantum and share.
Over the past year, gold’s share in the RBI’s forex reserves has risen nearly 4%, reflecting a net addition of 57.5t to its holdings. Yet recent trends suggest a moderation in the central bank’s gold buying. After consistently purchasing an average of 6.6t per month from January to November 2024, the RBI took a breather in December and February.
And in January and March its purchases were notably below the previous monthly average. This recent pattern in gold purchases may suggest a more measured approach from the RBI, although it underscores gold’s rising strategic importance in India’s reserves management.
In the row, at the Turnaround in imports, report said, despite record high prices, gold imports rebounded sharply in March after two consecutive months of decline. According to data from the Ministry of Commerce, imports climbed to US$4.4bn – nearly double the previous month’s figure and significantly higher than the US$1.53bn recorded a year earlier.
While still below the average monthly imports of US$7.3bn set between August and December 2024, the sharp uptick suggests a resurgence in demand and underscores a continued interest in gold, even at elevated prices. Based on our estimates, import volumes for the month were in the range of 47t to 52t.
The latest data from the Ministry of Commerce has revised gold imports for 2024 – from 724t to 812t – mainly due to revisions in import figures for the period from July to October.
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