Central banks have moderated their gold acquisitions, indicative of a prudent strategy as they contend with geopolitical uncertainties and high bullion prices. Nonetheless, experts assert that the long-term trend of diversifying reserves away from US assets remains firmly established. “In July, global central banks recorded a net purchase of 10 tonnes, according to reported data, reflecting a moderate net allocation relative to prior months.
Despite this slower pace of net buying, central banks continue to be net buyers of gold even in the current price range,” stated the World Gold Council. The figure for July 2025 reflects a year-on-year decline of 70%. In the first half of 2025, central banks acquired 123 tonnes, a slight decrease from the 130 tonnes purchased during the corresponding period the previous year. “Should geopolitical conditions become favorable, a decline in prices may occur, presenting a more advantageous moment to augment gold holdings.” The Reserve Bank of India appears to adhere to a comparable framework, it seems. Gold holdings have been increased to 12.1%. “Now, it would await cues from geopolitical developments,” stated Madhavankutty G.
The surge in prices of the yellow metal, which reached an unprecedented peak last week, is also referenced as a factor contributing to the slowdown. While central banks act as strategic purchasers of gold, they do exhibit a degree of sensitivity to its price level. Current spot prices for gold in the international market hover around $3,600 per ounce. Madhavankutty indicated that should the trade war between India and the US diminish, gold prices could decline, thereby providing greater flexibility for gold purchases. “Additionally, should the USD experience further depreciation, this would again be advantageous as prices would decline. The pause in July is primarily a risk management strategy rather than a measure intended to decrease the gold stock,” he stated.
The RBI refrained from increasing its gold reserves in July, after a slight increment of 0.4 tonnes in June. From January to July, the increase in gold reserves amounted to 4 tonnes, which stands in stark contrast to the 40 tonnes acquired during the corresponding period in 2024, as noted by Kavita Chacko. “Despite the slowdown, RBI’s gold holdings remain at a record high of 880 tonnes,” she stated in a note dated August 20.