A drop in global gold prices, not a sell-off by the Reserve Bank of India, explains the decline in the reported value of the central bank's bullion holdings, according to economists and treasury officials — a clarification that comes after a media report this week claimed the RBI had offloaded roughly $12 billion worth of gold reserves in the two weeks ending May 22 to shield its foreign currency assets (FCA) from geopolitical volatility stemming from the Middle East conflict.
RBI and PIB push back
The RBI and the Press Information Bureau (PIB) rejected the report outright, with the PIB labelling it "fake" on X and saying the claims were inconsistent with publicly available data. The RBI confirmed that the physical stock of gold held by the central bank — in its domestic vaults and with overseas custodians — stood at 880.52 tonnes, marginally higher than the 880.34 tonnes recorded on 20 March.
RBI data further show that the share of gold in India's foreign exchange reserves has risen consistently — from 13.92% at end-September 2025 to 16.70% on 31 March, 2026, and further to 16.85% as of 22 May, 2026, the very period cited in the original report.
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What drove the valuation drop
Between 8 May and 22 May, gold prices fell from around $4,650 per ounce to the $4,450–$4,500 range, according to global bullion pricing platforms. The RBI values its gold holdings using London Bullion Market Association (LBMA) prices in US dollars, multiplied by the USD/INR market exchange rate; import duty changes do not factor into this valuation methodology. Senior treasury officials also point to a possible change in valuation methodology as an additional contributing factor.
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Market reaction
Market veteran Ajay Bagga said the report was ill-timed and poorly sourced, adding that India's economic fundamentals remain resilient. "India's gold holdings remain constant. The 1991 comparison — when India had to pledge its gold to secure foreign exchange lines — is simply not applicable today. India in 2026 is a far stronger economy. A clarification should have been sought from the RBI before publishing," Bagga said.
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