Turkey sold 118 tons of gold in two weeks, worth nearly 20 billion US dollars.
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Amid the shockwaves of the Iran war, Turkey has utilized its gold reserves far beyond market expectations.
According to data cited by Reuters on Thursday, the Turkish central bank's gold reserves plummeted by more than 118 tons over the past two weeks, with a value close to $20 billion. Last week alone, it dropped 69.1 tons to 702.5 tons. This single-week sell-off marks the largest weekly decline since at least 2013.
Estimates by three banking professionals suggest that in just one week, about 26 tons of gold were sold directly, and another 42 tons were mobilized through swap transactions; the week before, gold reserves dropped by 49.3 tons. The Turkish central bank declined to comment on these estimations.
This move marks a major policy shift for Turkey. Over the past decade, Turkey has been one of the world's most active gold buyers.
Analysts say this round of sales amounts to about 15% of Turkey's total gold reserves, equivalent to the reserves accumulated over the past six years. After the outbreak of the Iran war, global energy prices surged, the demand for foreign exchange liquidity spiked, the lira came under pressure, forcing authorities to aggressively use gold reserves to stabilize the exchange rate and meet energy import payment needs.
Despite such massive concentrated selling, gold prices did not drop accordingly, prompting market questions: who are the buyers consistently absorbing Turkey’s huge gold sales?
Largest Drop in a Decade, but Pay Attention to “Gold Swaps”
Reports say Turkey’s gold reserves dropped by 69.1 tons in a single week last week, the steepest weekly drop since it began reporting international standard gold reserve data in 2013.
According to Iris Cibre, founder of Istanbul-based Phoenix Consultancy, Turkish officials have activated a significant portion of the central bank’s approximately $135 billion gold reserves via sales and swap arrangements. She estimates total sales at about 58.4 tons, more than half through overseas gold-for-foreign-exchange swaps. Independent calculations by three banking professionals show about 26 tons of gold were sold directly last week, and about 42 tons mobilized through swaps.
According to previous analysis by Wallstreetcn, the essence of gold swaps is “gold for FX, redeem later”—not “sold” but “pawned.” The central bank hands gold to counterparties (usually primary dealer banks), gets equivalent USD, and signs a forward contract to buy back the gold at a slightly higher price in the future. This is a short-term financing move, not permanent liquidation.
Choosing swaps over outright sale has at least three considerations. First, preservation of long-term holdings. If oil price surges are seen as temporary, swaps solve urgent liquidity needs with the option to redeem gold later, avoiding waste of a decade of accumulation. Second, mitigating impact on gold prices. Directly dumping 60 tons could trigger a market crash, eroding remaining reserves. Swaps occur off-market and are much less disruptive. Third, domestic political cushioning. Gold is seen by Turkish citizens as an “anti-inflation symbol”; announcing large-scale sales could trigger panic, while swaps keep some technical ambiguity.
The rapid completion of these transactions in two weeks benefited from a crucial early setup: Turkey had about 111 tons of gold stored at the Bank of England, valued around $30 billion. This gold could be used for FX intervention without logistic restrictions—no cross-border transport required, pledged and cashed out directly in London’s financial district.
Lira Defense & Energy Payments: Dual Pressure
Two overlapping pressures are driving Turkey’s massive gold sales: lira exchange rate stability and energy import financing.
After the Iran war erupted, global energy prices surged, and Turkey, as an import-dependent economy, faced mounting FX payment pressure. Meanwhile, heightened risk-aversion pressured the lira, forcing the central bank to step up interventions—increasing both gold reserve usage and direct FX sales/other market operations.
This situation threatens Turkey’s “de-inflation” strategy directly. The strategy hinges on maintaining lira stability or gradual controlled depreciation, usually aided by state bank FX interventions. However, rising energy costs and USD demand are eroding the sustainability of this framework.
Central Bank Governor: Proactive, Flexible, Controllable
Faced with doubts about the sharp drop in gold reserves, Turkish Central Bank Governor Fatih Karahan publicly defended the move before attending an investor meeting in London this week.
Karahan told Turkey’s official Anadolu Agency that the central bank is using “proactive, flexible, and controllable” reserve management and liquidity tools, implying that this round of gold sales is a tactical adjustment within the established policy framework—rather than passive crisis response.
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