Azerbaijan's sovereign wealth fund reduced its gold holdings for the first time, selling over 22 tons in the first quarter.

Azerbaijan's State Oil Fund (Sofaz) hit its internal portfolio limit after gold prices reached an all-time high, selling its gold reserves for the first time in the first quarter of this year, with sales exceeding 22 tons and a market value of more than $3 billion at current prices. This is the first reduction by Sofaz since it began buying gold in 2012. In recent years, Sofaz has been one of the world’s largest sovereign gold buyers, making it, together with central banks of other countries, an important force behind the repeated highs in gold prices. However, there is currently no indication that Sofaz will continue large-scale reductions. This sale reflects more of a passive portfolio rebalancing, rather than an active withdrawal from gold assets. The sale occurred amid a sharp gold price correction at the end of the first quarter. The Iran war caused upheaval in financial markets, with a strong dollar and soaring oil prices creating dual pressure for emerging market economies, prompting some countries to liquidate gold to support their own currencies. Turkey reduced its gold holdings by about $8 billion during the same period. Portfolio Limit Triggered the Reduction Sofaz’s selloff was directly caused by internal portfolio rules. According to the fund's disclosed investment policy, the proportion of gold in the investment portfolio is capped at 35%, with an allowed deviation of up to 4 percentage points, making the actual maximum 39%. By the end of 2025, driven by the ongoing rise in gold prices, the value of Sofaz's gold holdings had increased to 38% of its total assets, approaching the upper permitted deviation. Against this backdrop, an active reduction became a necessary move for maintaining compliant portfolio ratios, rather than a simple market timing decision. The shift in Sofaz’s role carries certain market signals. As one of the representative institutions for continued sovereign capital increases in gold in recent years, its transition to a net seller, together with simultaneous reductions by emerging market countries such as Turkey, has led to a temporary loosening of the sovereign buying force that previously supported gold prices. Risk Warning and Disclaimer Markets are risky; investment requires caution. This article does not constitute personal investment advice, nor does it take into account the individual investment goals, financial situation, or needs of specific users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investment based on this article is at your own risk.