Russia Sells Off Gold Reserves Amid Mounting Fiscal Pressure

For more than two decades, the Russian central bank was known as one of the world’s largest gold buyers. According to the latest data from the Central Bank of Russia (CBR), the country’s gold reserves fell below US$300 billion at the end of June 2026, as the nation’s total foreign exchange reserve assets shrank. The CBR recorded the value of Russia’s gold reserves at US$298.99 billion at the end of June 2026. The decline was also reflected in Russia’s total official reserves. The total value of reserve assets fell to US$720.4 billion at the end of June, from US$747.4 billion in May. Meanwhile, foreign currency reserves remained relatively stable at US$392.4 billion, little changed from US$392.3 billion the previous month. This marks the sixth consecutive month that Russia’s official gold reserves have declined. In April 2026, the CBR revealed that the drop in gold reserves was the largest in 25 years. World Gold Council data shows that between 2002 and 2025, Russia added more than 1,900 tonnes of gold to its foreign exchange reserves. In some periods, its purchases reached hundreds of tonnes per year, making it one of the most aggressive central banks in accumulating the precious metal. However, this year is different. As of 1 May 2026, Russia’s gold holdings fell to 73.9 million ounces. Since the beginning of the year, its gold reserves have shrunk by approximately 900,000 ounces, equivalent to 27.9 tonnes, the largest decline since 2002. Its total holdings fell to 2,304.76 tonnes, the lowest level since March 2022. The central bank’s gold reserves now stand at just 2,292.3 tonnes. According to Freedom Finance Global analyst Natalia Milchakova, the main reason is pressure on the state budget. Since the Russia-Ukraine war began in late February 2022, President Vladimir Putin has been grappling with massive budgetary needs. “By the end of March 2026, Russia’s budget deficit had reached RUB 4.6 trillion,” she told The Moscow Times. Without compensation from the Central Bank of Russia amid weakening oil and gas revenues, the deficit is expected to exceed RUB 5 trillion. Milchakova added that some of the gold sales were also conducted to strengthen foreign exchange reserves after export receipts weakened. In these transactions, gold was exchanged for yuan to increase foreign currency holdings. This means gold is no longer functioning solely as a store of value. A portion is now being used to support the state’s fiscal and liquidity needs. The public’s behaviour is moving in the opposite direction to the central bank. Amid economic uncertainty, domestic demand for gold has surged. In 2024, Russian consumers bought 75.6 tonnes of gold, equivalent to roughly a quarter of the nation’s annual gold production. Trading activity has also increased sharply. According to the Moscow Exchange, the volume of gold transactions reached 42.6 tonnes in the last month, an increase of more than 350% compared to March 2025. The value of transactions surged 500% to 534.4 billion roubles, or approximately US$7.1 billion. For Russian households, gold has become a way to preserve the value of their savings. According to Finam analyst Nikolai Dudchenko, Russia is not the only country utilising gold reserves when fiscal pressure mounts. “A number of central banks are currently selling gold reserves to cover various budgetary needs, including defence spending,” he said. Dudchenko added that the funds are also used to cover rising energy costs and to maintain the stability of the domestic currency exchange rate. This suggests that for some developing nations, gold reserves are no longer merely a symbol of foreign exchange strength. In certain situations, these assets also become a source of financing when fiscal space narrows.