China's gold reserves have grown every year for 15 consecutive years, reaching 14,727.16 tons by 2020, according to a yearbook issued by China Gold Association (CGA).
In the first half (H1) of calendar year 2021 (CY21), the addition of gold to India's forex reserves has been the highest - on a half-yearly basis -at 29 tonnes. Now, the RBI's gold holding - as a proportion of its forex reserves - has for the first time crossed 700 tonnes.
Why would these strong central banks purchase gold when the prices were shooting through the roof? Are there any lessons to learn for Central Banks in developing countries?
Some of the reasons could be:
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Standard Policy for growing reserves
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De-Dollarization
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Secure collateralized funding
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Devaluation of local currency
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Inflationary hedge
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National emergency
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Debt payment in physical gold
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Precaution to support local banks bullion exposure
