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With gold being a part of the forex reserves at just a mere7.9%, India should target buying more gold in the future, a Reserve bank of India (RBI) working paper advises. The 'optimum level of gold' as a part of the re..

23 Nov 2011

MUMBAI (Commodity Online): With gold being a part of the forex reserves at just a mere7.9%, India should target buying more gold in the future, a Reserve bank of India (RBI) working paper advises. The 'optimum level of gold' as a part of the reserve however a difficult question to answer.

In the wake of the global economic crisis and economic uncertainty, central bank demand for gold has gone up. As such, India should not consider itself an exception. After the 200 tonne gold purchase from the IMF in 2009, India has not added any significant quantity of gold into its reserves. But, the economic climate calls for further additions to the India's gold reserves, even in small quantities.

With gold prices reacting strongly to the US credit rating downgrade and the debt crisis in European nations, gold as a part of foreign reserves will continue to play a key role and as such India should build its gold reserves.

Source: rbi.org.in


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