While buying was aggressive in June, it was slow in the month of May. According to data released by the World Gold Council today, in May, the Reserve Bank of India added 5.6 tonnes, taking its total gold holding as part of foreign exchange reserves to 618.2 tonnes.
Alistair Hewitt, Director of Market Intelligence at the World Gold Council said today, “Reported net purchases of a tonne or more totalled 35.8 tonnes in May, (which is) 27 per cent lower than the previous month. This brings reported net purchases year-to-date to 247.3 tonnes, which is 73 per cent higher than the same period last year. Several emerging market central banks – including Russia, China, Turkey and Kazakhstan – have dominated buying for a few years now, and this is still the case in 2019 with those banks the four biggest buyers so far.”
RBI has added nearly 18 tonnes in 2019 and had 42 tonnes in 2018. Prior to 2018, RBI’s last purchase of gold for reserves was in 2009 when it bought 200 tonnes from the International Monetary Fund.
Globally, 2018 was the year central banks turned most active after five decades, buying 651.5 tonnes. This time they are reflecting concerns about the high share of US Dollar in reserves which was becoming risky. They need to hedge that risk and gold was the preferred asset.