The global rally in gold prices shows no sign of fatigue. While retail and institutional investors have played their part, a crucial driver of the surge has been sustained buying by central banks. Even at elevated prices, monetary authorities across the world have continued to accumulate bullion, underscoring gold’s enduring role as a strategic reserve asset in times of heightened economic and geopolitical uncertainty.

Among the most notable players in this shift are India and China. Both countries have been steadily reducing their exposure to US Treasuries while simultaneously increasing gold holdings, indicating a deeper rebalancing of reserve management strategies rather than short-term portfolio adjustments.

Reserve Bank of India (RBI) to diversify away from US government debt. Data released by the US Department of the Treasury shows that India’s holdings of US Treasuries fell below the $200 billion mark, declining to around $190 billion by the end of October 2025. This represents a sharp drop of $50.7 billion compared with the same period a year earlier.

During this time, the RBI moved decisively in the opposite direction with respect to gold. According to RBI data, the central bank’s gold holdings rose to 880.18 metric tonnes at the end of October 2025, up from 866.8 metric tonnes a year earlier. Notably, this increase occurred even as India’s total foreign exchange reserves remained broadly stable at around $685 billion, suggesting a reallocation within the reserve basket rather than an overall expansion.

This shift is evident in gold’s growing share of India’s reserves. As of September 26, gold accounted for 13.6% of RBI’s forex reserves, up sharply from 9.3% a year earlier, when total reserves were at a record high. The rising proportion highlights how gold has become central to India’s reserve strategy rather than a marginal asset.

A global divide in treasury holdings
India’s actions are part of a broader global divergence in how countries manage exposure to US government debt. US Treasury data shows that while total foreign investments in US Treasury bills stood at $9.24 trillion at the end of October 2025, the distribution of those holdings has shifted. Countries such as the United Kingdom, Belgium, Japan, France, Canada, and the UAE have increased their exposure to US Treasuries. Japan remains the largest foreign holder, with $1.2 trillion, followed by the UK and China. In contrast, China, Brazil, India, Hong Kong, and Saudi Arabia have reduced their holdings on a year-on-year basis.

This pattern suggests that geopolitical alignment, risk tolerance and domestic reserve priorities are increasingly shaping how countries view US debt, rather than a uniform faith in Treasuries as the world’s ultimate safe asset.

Source: Economictimesindiatimes