The global gold market is witnessing record-breaking highs every week, yet central banks around the world continue to expand their gold holdings to diversify away from the US dollar and Treasury debt. According to the World Gold Council (WGC), which compiles data from the International Monetary Fund (IMF) and central bank statistics, global central banks added a net 15 tonnes of gold to their reserves in August 2025.
Despite soaring prices, gold remains a safe-haven asset amid persistent geopolitical tensions, inflationary pressures, and global economic uncertainties. Among the top buyers in August, the National Bank of Kazakhstan emerged as the leading purchaser, reaffirming the global trend of central banks strengthening their balance sheets through gold diversification.
RBI Reduces Gold Purchases in 2025
Unlike other major economies, the Reserve Bank of India (RBI) has significantly slowed its gold purchases in 2025. For the second consecutive month in August, the RBI made no additions to its gold reserves. In fact, the central bank purchased gold in only three out of the first eight months of 2025, a stark contrast to its consistent monthly acquisitions throughout 2024, as reported by the Economic Times.
Between January and August 2025, the RBI’s total gold purchases stood at 3.8 tonnes, which is dramatically lower than the 45.4 tonnes purchased during the same period in 2024. As of August 29, 2025, the RBI’s total gold holdings stood at 879.98 tonnes, representing 13.6% of India’s foreign exchange reserves as of September 26, 2025 — up from 9.3% last year when total reserves were at their peak.
Experts suggest that while RBI’s gold accumulation has slowed, the higher valuation of existing reserves due to rising gold prices has naturally boosted the share of gold in India’s foreign exchange assets.
Global Gold Market Trends
Gold prices reached $3,429 per ounce on August 31, 2025, marking an impressive 31% year-on-year increase. The WGC noted that this unprecedented price rally has pushed gold to several record highs this year, which in turn has restrained central bank buying volumes. However, the organization emphasized that the recent slowdown does not imply reduced long-term interest from central banks in holding gold.
After a brief lull in July, when Bank Indonesia sold 11 tonnes, central bank purchases resumed in August, aligning with the March-to-June monthly averages of net additions. This signals that the global appetite for gold as a reserve asset remains robust, even as prices soar.
Outlook: Gold Demand Likely to Stay Strong
According to Canara Bank’s Chief Economist, Madhavankutty G, central banks are maintaining a strategic interest in gold, supported by expectations of further US Federal Reserve rate cuts. While the historical inverse relationship between interest rates and gold prices has weakened, the long-term fundamentals continue to favor gold.
He added, “Global uncertainties have not subsided, which supports gold. The quantity of gold mined globally remains limited, while demand remains steady. So, central banks stand to benefit from further upward movement in gold prices, which will strengthen their reserves.”
Despite record-high valuations, gold continues to hold its allure as a dependable reserve asset for global central banks. While India’s RBI has slowed its pace of accumulation in 2025, the overall global momentum remains positive. With inflation, geopolitical instability, and economic unpredictability shaping the macroeconomic landscape, gold remains an essential instrument of financial security and diversification for central banks worldwide.
