India’s sovereign gold reserves have surpassed the significant milestone of $100 billion for the first time, underscoring a dramatic shift in asset allocation driven by the metal’s meteoric price surge. This valuation achievement, however, masks a deliberate slowdown in direct gold purchases by the Reserve Bank of India (RBI), indicating that the substantial increase in the value of its gold holdings is primarily attributable to market appreciation rather than an aggressive accumulation strategy. The trend highlights a growing reliance on valuation gains to bolster a nation’s reserves, a phenomenon with broader implications for international finance and central bank asset management.
The Reserve Bank of India’s gold holdings reached $102.365 billion in the week ending October 10, with the value of its gold reserves climbing by $3.595 billion. Crucially, this surge occurred while the country’s overall foreign exchange reserves saw a slight decrease of $2.18 billion, settling at $697.784 billion. This divergence in performance underscores that the growth in gold’s value within India’s reserves is a function of external market forces rather than increased purchasing activity. Consequently, gold now constitutes approximately 14.7% of India’s total reserves, a proportion not seen since the late 1990s, reflecting a decade-long trend of gradually increasing gold’s share from below 7% to its current elevated level.
### Strategic Shift in RBI’s Gold Acquisition
Analysis of the RBI’s procurement patterns reveals a marked deceleration in gold acquisitions throughout 2025. Data from the World Gold Council indicates that the central bank added gold to its reserves in only four months of the first nine months of the year. This stands in stark contrast to 2024, when the RBI engaged in more consistent monthly purchases. Between January and September of 2025, India acquired approximately 4 metric tons of gold, a significant reduction from the 50 tons purchased during the equivalent period in the previous year. Kavita Chacko, Head of India Research at the World Gold Council, commented that the increased valuation of gold reserves is “largely driven by valuation gains from the rising gold price,” rather than an expansion of physical holdings.
### Global Investor Sentiment and Market Volatility
The robust performance of gold is not confined to central bank reserves; it has also captured the attention of institutional investors. A recent Bank of America Fund Managers Survey identified gold as the most favored investment position for October, surpassing even the “long Magnificent Seven” technology trade. However, investor sentiment remains somewhat bifurcated, with a notable percentage of fund managers reporting zero or minimal exposure to the metal. This cautious approach is juxtaposed with strong bullish forecasts from major financial institutions. Bank of America analysts have reiterated a “long gold” recommendation, projecting a potential peak of $6,000 per ounce by mid-2026. Similarly, Goldman Sachs has revised its end-of-2025 target upwards to $4,900 per ounce, while JPMorgan anticipates gold reaching $6,000 by 2029.
Despite the upward trajectory of gold prices, the gold mining sector has experienced significant volatility. The NYSE Arca Gold Miners Index saw a substantial decline of 6.4% on a recent Friday, marking its steepest drop since May. Major mining companies such as Newmont Corp., Agnico Eagle Mines Ltd., and Barrick Mining Corp. experienced significant share price retractions, falling 7.4%, 7.2%, and 7%, respectively. These declines occurred even after these companies had posted gains exceeding 100% year-to-date, while the price of gold itself had risen by just over 60%. This divergence suggests that while the underlying commodity is experiencing an unprecedented rally, the equity performance of its producers has become susceptible to broader market corrections and profit-taking.
The current market dynamics present a strategic dilemma for traders holding long positions in gold ETFs, such as the SPDR Gold Trust ETF. Analysts are observing whether these investors will choose to secure profits or maintain their positions in anticipation of further price appreciation. The tension between record commodity valuations and the more sensitive performance of related equities highlights the complex and evolving landscape for investors in the precious metals market.
Michael Zhang is a seasoned finance journalist with a background in macroeconomic analysis and stock market reporting. He breaks down economic data into easy-to-understand insights that help you navigate today’s financial landscape.