According to Bloomberg News, the Central Bank of Russia continues to sell gold to ease mounting budget pressure, and its gold reserves have fallen to the lowest level in more than six years.
Data released by the Central Bank of Russia on Thursday (August 20) showed that as of August 1, Russian gold holdings dropped by 1.6 million ounces from the start of the year to 73.2 million ounces, the lowest reading since January 2020. The value of Russia’s gold reserves shrank by 33.7 billion US dollars in the first seven months of this year.
This shift marks a major strategic pivot in Russia’s gold policy.
For many years, Russia ranked among the world’s largest official gold buyers. Its central bank peRSIstently purchased domestically‑mined gold and built up national reserve stockpiles through continuous gold accumulation.
In early 2020, Russia suspended gold purchases. Two years later, amid intensifying Western sanctions and blocked gold exports, the central bank announced plans to resume gold buying to absorb part of domestic output that could not be exported smoothly.
Nevertheless, large‑scale gold acquisition never truly resumed. Starting last year, the Central Bank of Russia has turned into a net seller of gold.
Bloomberg reports that this reversal is directly tied to Russia’s fiscal position. Due to falling energy revenues, the Russian Ministry of Finance is liquidating gold and foreign‑exchange assets held in the National Wealth Fund to cover widening budget deficits.
Rather than selling official gold reserves unilaterally and directly, the central bank carries out corresponding operations in the domestic market via the so‑called “mirror mechanism”, offsetting impacts on the ruble exchange rate and the broader financial system stemming from asset disposals by the finance ministry.
The steady draw‑down in gold reserves reflects tightening fiscal pressure caused by shrinking energy income. The country that built massive gold stockpiles over decades now has to deploy those assets to shore up public finances.
Russian gold reserves have fallen back to pre‑pandemic levels. The scale and pace of future gold disposals will be closely watched by markets, as they may offer further insight into fiscal stress amid peRSIstently weak energy earnings.