RMF241 hour agoBusiness2 min read

Russia is selling gold on an unprecedented scale

World Gold Council: Global purchases increased by 42%. y/y, China is the largest buyer, Poland is in second place

Quick Look

Central banks around the world bought 321.2 tons of gold in the third quarter, 42 percent. more than a year earlier, the World Gold Council reported.
The Russian central bank sold 18.66 tons, being the largest seller.
The largest buyer was the People's Bank of China (63.14 tons), and Poland increased its reserves by 40.45 tons.

AI-generated summary

Why It Matters

The Russian central bank has been selling gold for ten months to alleviate the effects of the budget deficit, which has reached 7.3 trillion rubles this year. Since the beginning of the full-scale war against Ukraine, the deficit was expected to exceed 22 trillion rubles. Before the invasion of Ukraine, Russia had approximately 2,300 tons of gold, which was the fifth largest resource in the world.

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In the third quarter, central banks around the world purchased a total of 321.2 tons of gold, 42 percent. more than a year earlier, the World Gold Council reported.

However, the Russian central bank is among the few institutions reducing its gold resources. It sold 18.66 tons of gold, much more than other central banks that reduced reserves.

Gold was also sold by the central banks of Kyrgyzstan - 0.95 tons - as well as of Germany, Singapore and Mexico. However, their transactions were much smaller.

Ten months of sales

The Bank of Russia has been selling gold for ten months. The operations reflect the actions of the Ministry of Finance, which uses the assets of the National Welfare Fund to mitigate the effects of the budget deficit.

The Russian budget deficit reached 7.3 trillion rubles this year. Since the beginning of the full-scale war against Ukraine, it was supposed to exceed 22 trillion rubles, or approximately EUR 243 billion.

In the previous quarter, Russian gold reserves decreased by 21.77 tons. Data from the regulator itself show that from December to September, metal resources in Russian currency and gold reserves decreased by 2 million troy ounces, or about 62 tons.

According to The Moscow Times, the current sale is the largest reduction in Russia's gold reserves since 1998. During the financial crisis at that time, the central bank sold approximately 118 tons of the ore within three months. Then the pyramid of short-term treasury bonds collapsed in the country, leading the Russian government to insolvency.

Before the Russian invasion of Ukraine in early 2022, Russia had approximately 2,300 tons of gold. It was the fifth largest resource of this metal among the world's central banks.

China is the biggest buyer. Poland is right behind you

The largest buyer of gold in the third quarter was the People's Bank of China, which increased its reserves by 63.14 tons. Significant purchases were also made by the central banks of Poland (40.45 tons), Uzbekistan and Kazakhstan.

What to Watch

AI outlook — possibilities, not facts

Russia will continue to sell gold reserves in the coming months to cover its budget deficit.
Likely · Within months

Open Questions

Will Russia continue selling gold in the coming quarters?
What will be the long-term effects of reducing gold reserves on the ruble and the Russian economy?
Will other central banks increase gold purchases in response to Russia's sales?