Russia is continuing to reduce its gold reserves to address fiscal pressures stemming from declining energy revenues.
According to Bloomberg, the latest data from the Russian central bank shows that as of May 1, Russia's gold holdings have decreased by 900,000 ounces since the beginning of the year, dropping to 73.9 million ounces—the lowest level since February 2022. In the first four months of this year, international gold prices repeatedly reached record highs, averaging around $4,800 per ounce. Based on this price, the estimated value of the gold sold amounts to approximately $4.3 billion.
The primary reason behind this round of gold sales is the increasing fiscal pressure on Russia. According to Bloomberg, the Russian Ministry of Finance has previously sold gold and foreign exchange assets from the National Welfare Fund to cover budget shortfalls caused by weaker energy revenues.
To mitigate the impact of fiscal operations on the domestic financial system, the Russian central bank has conducted simultaneous hedging operations in the domestic market under a so-called "mirror mechanism." This means that the central bank's current gold sales are not an independent decision but rather a coordinated response to the Ministry of Finance's asset liquidation efforts, with both actions working in tandem to stabilize potential fluctuations in the ruble exchange rate and liquidity.
The Russian central bank was once the world's largest sovereign gold buyer, purchasing nearly all domestic mineral output before suspending its gold purchases. In early 2020, the bank halted large-scale gold acquisitions. Two years later, although it pledged to resume gold purchases to absorb domestically produced gold that could not be exported, it has yet to restart significant procurement.
Since last year, the Russian central bank has gradually reduced its gold holdings, with the pace of sales accelerating further this year. This shift marks a substantial change in Russia's role in the global gold market.
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