As gold prices soar to unprecedented heights, crossing $4,000 an ounce and reaching a staggering all-time high of $4,380 in October 2025, central banks worldwide are reevaluating their gold holdings and accounting practices. Reserve Bank of India (RBI) Deputy Governor Shirish Chandra Murmu has emphasized the urgent need for transparency and dialogue in how central banks approach gold valuation, as these historic price levels significantly impact balance sheets globally.
The Phenomenal Gold Price Surge
Gold’s recent price rally has caught the attention of investors and central banks alike as the precious metal reached an astonishing peak on October 17, 2025. This significant price increase, climbing approximately 65% throughout 2025, can be attributed to a multitude of factors, including heightened geopolitical tensions, ongoing de-dollarization efforts, and a shift towards reserve diversification among sovereign nations. As a result, global central bank purchases of gold surged, marking 2024 as yet another record year with demand surpassing 1,000 tonnes for the third consecutive year.
Murmu brought this issue to the forefront during his keynote address at the inaugural International Conference on Central Bank Accounting Practices organized by the RBI in Mumbai. He noted that “the recent sharp rise in gold prices has garnered a lot of attention and discussions globally with respect to its impact on the central bank balance sheets,” highlighting the critical nature of reevaluating how these holdings are managed and reported.
RBI’s Strategic Gold Accumulation and Repatriation
In response to the fluctuating gold landscape, the RBI has strategically increased its gold reserves, adding 57.49 tonnes in the fiscal year 2024-25, which elevated its total holdings to 879.59 tonnes. As the value of these reserves skyrocketed to $78.17 billion—an impressive increase of 48.41% within a year—the bank also repatriated nearly 64 tonnes of gold to India in the first half of the 2025-26 fiscal year. This decisive move signals a shift towards domestic storage, likely spurred by global skepticism about holding sovereign assets abroad amid rising tensions and financial uncertainties.
Commenting on RBI’s cautious approach, Murmu stated, “The RBI conservatively revalues the gold holdings at 90% of the London Bullion Market Association (LBMA) gold price,” a strategy aimed at mitigating risks and gaining a clearer picture of their balance sheet’s health amidst volatile market conditions. The progressive repatriation of gold also reflects a growing preference for securing national assets domestically, following the global trend observed with other central banks.
Global Trends in Gold Reserves and Purchases
As central banks commit to gold for their reserves, the overall trend has extended to an impressive 15 consecutive years of increasing gold purchases. In 2024, the National Bank of Poland emerged as a leading buyer, adding 90 tonnes to its reserves—pushing its overall holdings to 448 tonnes, which represents a noteworthy 17% of its total international reserves. Such data gives credence to the World Gold Council’s assertion that central bank demand is far exceeding past annual averages, confirming a profound shift in sentiment towards gold as a foundational asset.
Despite the focus on domestic storage, RBI’s increasing accumulation does not indicate a decrease in overall demand. As the World Gold Council reported, international trends demonstrate a consistent appetite for gold, with many central banks showcasing similar repatriation patterns to bolster their security. Arguably, this behavior not only supports gold’s robustness as a monetary asset but also suggests a heightened awareness among central banks of relying on domestic holdings for economic resilience.
Rethinking Accounting Practices and Transparency
Amidst these changes, the lack of a unified global accounting standard for gold valuations remains a challenge. The valuation methods for gold holdings vary across countries, creating discrepancies in how central banks present their financial performances. Some employ International Financial Reporting Standards (IFRS), while others adopt national frameworks or hybrid approaches, resulting in a patchwork of accounting practices that complicate comparisons between nations.
Murmu addressed this critical issue, stating, “Accounting policies chosen by central banks play a crucial role in shaping their balance sheets. Prudence and transparency in accounting are not just buzzwords but the pillars which central banks must safeguard.” He argued that there is a pressing need for better disclosures and knowledge sharing among central banks to ensure that accounting policies reflect true financial viability in the evolving economic landscape.
Envisioning the Future: The CBDC Influence
As central banks navigate the complexities of modern finance, digital currencies are making waves, prompting discussions about their potential impact on central bank structures and liquidity operations. Murmu spoke to the transformative power of Central Bank Digital Currency (CBDC), noting how its design and implementation could reshape financial behavior and potentially replace traditional banking instruments.
During the conference, he emphasized, “It is also being discussed and debated globally whether and how this may impact central bank balance sheet structures and the need for liquidity operations.” As conversations around CBDCs grow, ongoing research aims to uncover their implications in this volatile global economy, suggesting that preparations are necessary to adapt to rapid changes in monetary dynamics.
Reflections on Gold’s Role in a Dynamic Economy
The evolving landscape of gold valuations and central banking signifies a crucial inflection point in monetary policy and economic strategy. With gold’s allure reaffirmed and its significance in central bank reserves rendered undeniable, the call for greater accountability and transparency has never been more urgent. As Deputy Governor Murmu aptly stated, the time is ripe for central banks to collaborate and share knowledge, ensuring robust frameworks that will enhance the management of their gold assets in an era marked by unprecedented volatility and uncertainty. The foundation built today will dictate the strengths and weaknesses of tomorrow’s economic strategies, proving that the age-old value of gold still holds monumental weight in shaping financial landscapes across the globe.
