New Delhi, Dec 15 (NationPress) As of March 31 this year, the Reserve Bank of India held 879.58 metric tonnes of gold, marking an increase of 57.48 metric tonnes compared to 822.10 metric tonnes on March 31, 2024, as reported to Parliament on Monday.

Minister of State for Finance, Pankaj Chaudhary, informed the Lok Sabha that these gold reserves play a crucial role in bolstering confidence in the Indian rupee and enhancing the overall external stability of the economy.

When addressing inquiries about the rising prices of gold and silver in the domestic market, he noted that the prices of these precious metals are primarily influenced by their international prices (in US dollar terms), the exchange rate of the Indian rupee against the US dollar, and applicable tariffs.

The recent price surge is largely due to increased geopolitical tensions and uncertainties regarding global growth, which have driven up safe-haven demand, leading to significant gold acquisitions by central banks and major institutions globally.

The minister highlighted that this spike in gold prices may have varying impacts across different states or demographic groups, depending on their socio-cultural and economic dependence on these precious metals.

“Gold serves a dual purpose — as a consumption item and as an investment vehicle, regarded as a safe asset for hedging against uncertainties,” he mentioned.

As a result, the appreciation in gold and silver prices positively impacts household wealth, as the notional value of existing holdings increases, he added.

Chaudhary further explained that the government does not engage in price fixation for precious metals, which are determined by market dynamics. However, in July 2024, the government did reduce customs duties on gold imports from 15% to 6% to provide relief to consumers.

To alleviate the demand for physical gold and mobilize inactive domestic gold, the government has introduced initiatives such as the Gold Monetisation Scheme (GMS), Gold exchange-traded funds (ETFs), and the Sovereign Gold Bond Scheme, allowing part of the demand to be fulfilled from local stock rather than fresh imports, thus mitigating external vulnerability and price pressures.

According to the minister, the RBI and government regulation of bullion imports through designated agencies, banks, and refineries enhance traceability, curtail grey-market activities, and enable domestic prices to align more closely with global benchmarks, rather than react to shortages or speculative surges.