Global Central Bank Demand Fuelling Gold Surge, Says FM Nirmala Sitharaman

Speaking about the recent surge in gold prices, Union Finance Minister Nirmala Sitharaman said it was due to increased demand and purchases by global central banks. “Gold prices have spiked because central banks globally are buying a lot of it,” Sitharaman said at a press briefing after the RBI Central Board meeting. The meeting was attended by RBI Governor Sanjay Malhotra and Deputy Governors Poonam Gupta, J. Swaminathan, Shirish Chandra Murmu, and T. Rabi Sankar.

From North Block, Sitharaman was accompanied by Minister of State for Finance Pankaj Chaudhary; secretaries from the Departments of Financial Services, DIPAM, Expenditure, and Revenue; and Chief Economic Advisor V. Anantha Nageswaran.

Diversifying Central Bank Reserves

As per data, the US holds the most gold at 8,133 tonnes, followed by Germany, Italy, and France. China has also rapidly increased its gold reserves, marking the 15th consecutive month of purchases and reaching nearly 2,308 tonnes by February. India’s gold reserves also hit a record high of nearly 880.3 tonnes.

The shift toward gold reserves by global central banks is seen as an effort to diversify reserves away from the US dollar, as per reports. According to a report by The Indian Express, India has reduced its US securities holdings by nearly 19% from a year ago. China has also reduced its US Treasury holdings to $683.5 billion from $760.8 billion in 2025.

Tariff Fears Continue to Fuel Demand

The yellow metal has also resurfaced as a safe-haven asset for investors amid heightened geopolitical tensions and renewed global tariff threats from US President Donald Trump. On Monday, gold opened 2% higher on the Multi Commodity Exchange (MCX) at ₹1,60,049 per 10 grams for 24-carat purity.

The Indian Bullion Jewellers Association (IBJA) quoted standard gold at ₹1,55,066 per 10 grams on the domestic benchmark, reflecting the global bullish trend in gold. The IBJA rate serves as the reference price for the Reserve Bank of India’s Sovereign Gold Bonds (SGBs), which are valued based on the average closing price of the preceding week.

Sitharaman said the government is keeping a close watch on gold prices and noted that the metal’s price typically experiences seasonal upward pressure during festive demand but has not breached “certain limits.”

“Gold has traditionally been a household investment and often sees seasonal spikes around festivals. We are monitoring the trend, but prices have not gone beyond a particular threshold,” Sitharaman said.