Did RBI Sell Gold To Defend Forex Reserves Amid US-Iran Conflict? Report Suggests USD 12 Billion Bullion Sale

The Reserve Bank of India (RBI) may have sold a portion of its gold reserves to strengthen the country's foreign exchange position amid growing economic pressures stemming from the ongoing US-Iran conflict, according to a Bloomberg Economics assessment.

India, the world's third-largest crude oil importer, is facing heightened risks from rising energy prices and a weakening rupee as geopolitical tensions in the Middle East continue to disrupt global markets. Policymakers have responded with measures aimed at curbing foreign exchange outflows and stabilising the economy, including higher fuel prices and increased import duties on precious metals.

Bloomberg Economics Flags Possible RBI Gold Sales

According to Bloomberg Economics, the RBI may have sold gold worth nearly USD 12 billion during the two weeks ending May 22. The estimate is based on publicly available data analysed by Abhishek Gupta, Senior India Economist at Bloomberg Economics. India Gold Demand Falls: Why Indians Are Buying Less Gold After Import Duty Hike.

Gupta noted that the central bank's foreign currency assets increased by approximately USD 7.5 billion during the same period, despite a decline in gold holdings. The reduction in gold reserves occurred even as import duties on the precious metal were raised, a move that would typically increase the value of RBI's bullion stock. Jabalpur Strikes Gold: Geological Survey Reveals Gold Reserve in Mahgawan Keolari Area of Sihora Tehsil, MP District Could Join India’s Most Mineral-Rich Zones.

The unusual pattern has led analysts to suggest that the RBI may have liquidated part of its gold reserves to boost readily deployable foreign currency assets.

Rising Oil Prices and Capital Outflows Add Pressure

If confirmed, the gold sales would signal growing concern among Indian policymakers over the economic impact of the US-Iran conflict, particularly its effect on crude oil prices and global shipping routes through the Strait of Hormuz.

Higher oil import costs and persistent capital outflows have increased pressure on India's current account balance and foreign exchange reserves. Strengthening foreign currency assets could help the RBI manage volatility in the rupee and meet external financing needs more effectively.

RBI Likely to Continue Building Forex Buffers

According to Bloomberg Economics, the RBI is expected to continue increasing its foreign currency reserves whenever market conditions become favourable. Factors such as a weaker US dollar, renewed foreign capital inflows and lower crude oil prices could create opportunities for reserve accumulation.

The strategy reflects the central bank's focus on maintaining adequate liquidity and protecting the economy from external shocks.

RBI Holds Over 880 Tonnes of Gold

As of March-end, the RBI held 880.52 metric tonnes of gold. Around 77% of these reserves were stored within India, up from 66% six months earlier.

In its latest half-yearly foreign exchange report, the RBI stated that most of its overseas gold reserves are held with the Bank of England and the Bank for International Settlements (BIS).

The central bank has gradually repatriated more gold to India in recent years, reflecting broader concerns among emerging-market economies about keeping strategic reserves abroad. Such concerns intensified after Western countries froze Russian reserves following the outbreak of the Ukraine war.

RBI Exploring More Measures to Support Rupee

According to earlier Bloomberg reports, RBI Governor Sanjay Malhotra is considering several options to support the rupee, including potential interest rate hikes and measures to attract additional dollar inflows from foreign investors.

Recent interventions by the central bank in the foreign exchange market have helped the rupee recover from record lows touched on May 20. However, the currency remains under pressure and was trading at 95.17 against the US dollar on Tuesday.

Market participants expect the RBI to announce further measures in the coming weeks as it seeks to strengthen foreign exchange reserves and shield the economy from the fallout of geopolitical tensions in the Middle East.

(The above story first appeared on LatestLY on Jun 03, 2026 09:06 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).