The Reserve Bank of India repatriated 102 tons of gold from the UK, bolstering domestic reserves as global instability drives demand for safe-haven assets.

102 tons of gold returned: RBI transfers assets from the Bank of England

The Reserve Bank of India (RBI) returned 102 tons of gold from the Bank of England to India during Dhanteras, strengthening domestic reserves amid rising geopolitical tensions, according to reports. The transfer, conducted under strict security and enhanced safety measures, is part of a broader plan by the RBI to repatriate India's gold reserves.

As of September, India's total gold reserves stand at 855 tons, with 510.5 tons currently held domestically. This recent shipment follows a similar one in May, when 100 tons were transferred from the UK, marking India's largest gold repatriation since the 1990s. In total, 214 tons have been returned to India since September 2022, underscoring the country's focus on securing assets rather than using them as collateral, as seen in previous financial crises.

Currently, 324 tons of gold from India are still held at the Bank of England and the Bank for International Settlements, institutions renowned for their secure storage capabilities and the liquidity advantages of the London bullion market. However, recent global instability has shifted India's approach towards keeping assets closer to home.

Gold now accounts for 9.3% of India's foreign exchange reserves, up from 8.1% in March, as demand rises amid global tensions, including conflicts in the Middle East. In Mumbai, gold prices have surged to ₹78,745 ($936.50) for 10 grams, with forecasts indicating prices could rise to ₹85,000 for 10 grams by 2025 as investors increasingly view gold as a stable asset.

Indian consumers continue to maintain high gold purchases despite record prices during the Dhanteras and Diwali festivals, driven by expectations of future increases amid a cooling stock market. Saurabh Gadgil, chairman of PNG Jewellers, noted strong demand for gold and silver coins and bars due to favorable returns compared to stocks. Local prices for both metals reached all-time highs last week, and ongoing demand could exacerbate India's trade deficit, putting pressure on the rupee.
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