RBI Brings Over 100 Tonnes of Gold from UK Back To India

Gold repatriation from overseas:  The Reserve Bank of India (RBI) has reportedly moved over 100 tonnes of gold from the UK to its domestic vaults, marking the first substantial addition to the locally held stock since early 1991. The central bank has imminent plans to transfer a similar quantity of gold back home to India during the next few months. As per sources, the transfer was conducted for logistical reasons and to ensure diversified storage.

India is world’s top consumer of gold and the volatility in prices of the yellow metal has seen the country react similarly as the other emerging markets (EMs). The hoarding of gold by central banks of emerging markets continues unabated as West Asia remains on the boil. Amid this trend, the Reserve Bank of India (RBI) is said to have moved over 100 tonnes of gold from the UK to its domestic vaults, marking the first substantial addition to the locally held stock since early 1991, as reported by sections of media.
The geopolitical situation prevailing in West Asia has been a matter of concern and gold prices have taken a hit. In their separate outlook, commodity experts say, investors could be seen increasing allocation to gold from the existing 8 - 10 per cent to 10 - 15 per cent in the next three months owing to a positive outlook. Gold prices have seen a 19 per cent increase during the last three months and in terms of a year-on-year (YoY) basis as well, gold prices have witnessed 19 per cent increase.

Russia- Ukraine, Israel- Palestine wars

The outbreak of the Russia-Ukraine war had at one point in time pushed up global gold prices to $2000 per ounce. Gold is often referred to as a symbol of financial wellness and prosperity, the value of which has endured through different economic tribulations. As soon as war broke out between Israel and Palestine in October last year, soon after the former launched airstrikes on Gaza, the price of yellow metal shot up in response to the war. 
Trade watchers took a sigh of relief after Russian President Vladimir Putin last week hinted that he was open to peace talks with Ukraine.  Although short lived, any possible thaw — be it peace talks between Russia and Ukraine or a ceasefire in the Israel - Palestine conflict, a constant rally in gold which has continued for long may see prices moderate.

What causes the price hike?

Commodity experts believe that gold benefits from economic distress as investors tend to shun risky assets. Gold is often viewed as a safе-havеn assеt. At times of financial markеts engulfed by lack of clarity and risky nature, investors prеfеr to rush to safе-havеn assets like gold to prеsеrvе their capital, which shoots up prices of gold. Among the primary reasons responsible for investors turning to gold is its pivotal role as a hedge against inflation and economic uncertainty. Gold is akin to maintain its value during inflationary times, preserving investors’ wealth. The price fluctuations of gold are influenced by various factors like global gold demand, currency values across nations, and interest rates, among others.