Russia has sold over $4 billion worth of gold this year, with reserves falling to their lowest level since early 2022.

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Russia is continuing to reduce its gold reserves to cope with fiscal pressure caused by 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 hit record highs, averaging about $4,800 per ounce. Based on this price, the scale of the reduction corresponds to about $4.3 billion in funds.

The direct cause of this round of gold reduction is the growing pressure on Russia's fiscal side. According to Bloomberg, the Russian Ministry of Finance has previously sold gold and foreign exchange assets from the National Wealth Fund to cover the budget gap caused by weaker energy revenues.

To mitigate the impact of fiscal operations on the domestic financial system, the Russian central bank has simultaneously conducted hedging operations in the domestic market based on the so-called "mirror mechanism." This means that the current gold reduction by the central bank is not an independent decision, but a coordinated response to the Ministry of Finance’s asset liquidation, with the two working together to stabilize the ruble's exchange rate and potential liquidity fluctuations.

The Russian central bank was once the world's largest sovereign gold buyer, purchasing almost all of the country's mine production before suspending purchases. In early 2020, the bank suspended large-scale gold buying; two years later, although it promised to restart purchases to absorb domestic gold that could not be exported, large-scale buying was never resumed.

Since last year, the Russian central bank has gradually reduced its gold holdings, and the pace of reduction has accelerated this year. This marks a significant shift in Russia's role in the global gold market.

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