RBI Sells 35 Tonnes of Gold Amidst Declining Forex Reserves: What Is Happening to India’s Vaults?

The Reserve Bank of India (RBI) has recently sold 35 tonnes of gold, causing concern among market watchers about the depletion of India’s gold reserves. According to RBI’s latest weekly release, the value of its gold holdings dropped by nearly $3.01 billion, bringing total gold reserves to around $105.5 billion as of late October 2025.

This gold sale is part of RBI’s efforts to stabilize the rupee, which has been weakening against the US dollar in global foreign exchange markets. To support the rupee and manage volatility, the RBI has sold gold as well as foreign currencies to shore up reserves. Currently, India holds approximately 879 tonnes of gold, valued at more than $100 billion, but the sale indicates RBI’s active use of gold assets as a market intervention tool.

Experts say the declining gold reserves reflect a broader trend where RBI manages its portfolio dynamically amid geopolitical risks and currency fluctuations. While the RBI has brought home significant quantities of gold from overseas vaults over the past two years, it is also liquidating some gold holdings to maintain currency stability. The rupee’s recent depreciation and dollar strength have compelled RBI to intervene in the forex market using every available asset, including gold.

India’s total foreign exchange reserves decreased recently by about $6.93 billion, underlining the pressure on the country’s external assets. The RBI has about 879.6 tonnes of gold in total, split between domestic holdings and those stored with international custodians like the Bank of England and the Bank for International Settlements.

Global factors triggering RBI’s gold sales include the strengthening US dollar, concerns over US Treasury securities, and geopolitical uncertainties including the Russia-Ukraine conflict. Despite these challenges, gold’s share in India’s total forex reserves has risen to approximately 14.7%, the highest in nearly three decades, highlighting the metal’s importance as a safe-haven asset.

In summary, RBI’s recent sale of 35 tonnes of gold is a response to currency market pressures rather than a permanent sell-off, representing a strategic and flexible approach to reserve management as India navigates complex global economic challenges.

This report clarifies why India’s gold reserves fluctuate and the broader economic context influencing RBI’s decisions to buy or sell gold as part of its forex reserve management.