The Reserve Bank of India (RBI) may have sold gold worth about US$12bn (billion) over the two weeks ended 22 May 2026 to strengthen its foreign currency reserves amid mounting pressure from the ongoing Middle East conflict, according to
an analysis by Bloomberg Economics. RBI, however, emphasised that the
Bloomberg Economics report is not correct. In
a clarification, RBI says it discloses the physical stock of gold in its monthly bulletin, and as of the date, the physical stock of gold remains unchanged at 880.52 tonnes.
The assessment, prepared by Abhishek Gupta, senior economist for India at Bloomberg Economics, suggests that the central bank simultaneously purchased around US$7.5bn in foreign-currency assets during the same period.
Bloomberg Economics based its conclusion on publicly available data showing that the value of the RBI's gold holdings declined, despite a recent increase in import duties on the precious metal. Such a duty hike would ordinarily boost the valuation of the central bank's bullion stock, suggesting active gold sales, the report said.
RBI had not responded to Bloomberg's request for comment at the time of publication and has not issued any official statement confirming or denying the assessment.
According to Bloomberg Economics, the apparent move reflects policy-makers' concerns over growing pressure on India's external finances as the conflict involving Iran and the effective closure of the Strait of Hormuz continue to disrupt global energy markets.
India, the world's third-largest oil importer, has faced a rising import bill due to elevated crude oil prices. At the same time, foreign capital outflows have added pressure on the country's balance of payments and foreign-exchange reserves.
"The purported sales underscore policy-makers' concerns about the pressure India is facing from sustained capital outflows and higher oil prices as the Iran war and effective closure of the Strait of Hormuz drag on," Bloomberg Economics said.
The analysis suggests that RBI is prioritising liquid foreign-currency reserves over gold holdings at a time when a widening current account deficit is weighing on the rupee.
The Indian currency came under significant pressure during the period under review. Bloomberg reported that the rupee touched a record low against the US dollar in May before recovering part of its losses following RBI intervention in the foreign exchange market.
According to Bloomberg News, RBI governor Sanjay Malhotra is evaluating several options to stabilise the currency, including the possibility of raising interest rates and attracting additional dollar inflows from overseas investors.
Bloomberg said the central bank's interventions have helped the rupee outperform several Asian peers since 20 May 2026, when it fell to an all-time low.
Mr Gupta said RBI would likely continue rebuilding its foreign exchange reserves when market conditions become more favourable.
"Periods of dollar weakness, renewed foreign-capital inflows, or lower oil prices would create opportunities to add to foreign-currency assets," he wrote.
The assessment indicates that any gold sales by RBI should be viewed as a temporary liquidity management measure rather than a strategic shift away from bullion holdings.
RBI data show that the central bank held 880.52MT (metric tonnes) of gold at the end of March 2026. About 77% of these holdings were stored domestically, compared with 66% six months earlier.
According to RBI's half-yearly foreign exchange reserves report released in April, most of the central bank's overseas gold holdings are maintained with the Bank of England and the Bank for International Settlements.
Bloomberg Economics noted that the increase in domestically stored gold reflects a broader trend among emerging-market central banks, many of which have reassessed the risks of holding reserves overseas following Western sanctions that froze Russian assets after the Ukraine conflict.
The analysis suggests that RBI's reported actions were aimed primarily at preserving liquidity and ensuring adequate foreign-currency resources during a period of heightened geopolitical uncertainty, rising energy costs and pressure on the rupee.
While Bloomberg Economics estimates that the RBI sold a substantial amount of gold during the period, the central bank has not officially confirmed the transactions.
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