Why Is RBI Buying More Gold and Cutting Down US Investments ?

India’s central bank seems to be rearranging its reserve cupboard. And gold, again, is the favourite coin.

Strange how gold never loses its shine, isn’t it? The Reserve Bank of India (RBI) is proving that true again. As per the Weekly Statistical Supplement dated 11 October 2025, the RBI’s gold reserves touched USD 100.37 billion, the first time ever. That’s about 14.6 percent of India’s total foreign reserves, which now stand near USD 687.8 billion.

Around the same time, a US Treasury Department report (August 2025) showed India’s holdings of US Treasury securities fell to USD 224.7 billion, down from USD 237.6 billion in 2024. That small drop may look simple, but it tells a story of quiet caution, a shift in RBI’s foreign investment portfolio.

Read More - Central Bank Gold Statistics: Central Banks Ramp Up Gold Buying in October

What’s Driving the RBI’s Move Toward Gold?

The India Central Bank Gold Report 2025 mentioned that India’s total gold stock rose to 882.6 tonnes, up from 842 tonnes in 2024. The value climbed faster than the quantity. Prices helped more than buying did. The RBI bought little this year, around 4 tonnes by September 2025. Still, the value of gold in its chest rose sharply because global prices jumped.
 

These numbers show India’s central bank gold reserve expansion alongside lower exposure to dollar-based assets. It’s clear that the reasons behind RBI’s gold purchase strategy are not random. The bank wants safer assets that keep value even when markets shake.

Feels like they are building a cushion, not chasing profit.

How Does This Affect India’s Forex Reserves Mix?

The Ministry of Finance’s Annual Economic Review 2025 said the share of gold in India’s reserves has almost doubled in ten years. The dollar share keeps slipping little by little.
 

That’s the impact of RBI reducing US dollar investments. Gold brings calm in crisis, but dollars bring quick access. The RBI seems fine trading a bit of speed for safety. Maybe they learnt it the hard way during past currency swings.

Has RBI Done This Before?

Yes, this isn’t new. The RBI has turned to gold during uncertain times before. Back in 2013, when the rupee was sliding, the RBI quietly raised gold holdings too. Again during 2020, when the pandemic rattled markets, it leaned on gold for balance. This time, the step feels deliberate, not defensive.

Earlier this year, a Livemint report noted how the RBI’s gold share touched the highest in twenty years. The pattern repeats, only stronger now.

What Are Experts and the Government Saying About This Shift?

The Finance Ministry’s September 2025 note said the RBI’s actions are in line with India’s plan to “diversify reserves and strengthen quality.” Economists reading the trend call it part of RBI diversification away from US assets.

The World Gold Council Report (August 2025) found that central banks worldwide added about 15 tonnes of gold that month. So India is not alone. Feels like everyone is quietly preparing for uncertain days.

Also Read – India’s Gold Repatriation Explained: Why RBI Moved 100 Tonnes from London

The LoansJagat news article “Treasury Bills (T-bills): RBI Cuts Holdings in US Treasury Securities” (14 Sept 2025) also noted the same trend, stating that “RBI’s exposure to US T-bills has steadily reduced as part of its reserve diversification strategy

Conclusion 

This isn’t panic. It’s planning. The RBI is turning its reserves towards assets that don’t lose sleep over policy shocks. 

With gold above USD 100 billion and fewer US Treasuries on its list, India’s reserves now look heavier in metal, lighter in paper. Maybe that’s the kind of balance a growing economy needs today.