Why is Russia selling its gold?
Russia has become one of the world's biggest sellers of gold over the past 12 months. It's an attempt to raise cash in the face
Russia has become one of the world's biggest sellers of gold over the past 12 months. It's an attempt to raise cash in the face of budget issues, but not necessarily a sign of a looming financial crisis. Russia has sold significant volumes of its gold reserves so far in 2026 as the Kremlin seeks to raise cash to offset a big budget deficit. The Russian Central Bank announced recently that its gold reserves stood at 73.4 million troy ounces, or 2,282 metric tons, as of the start of July. That represents a decline of around 43.5 metric tonnes since the start of 2026. It means Russia's gold reserves are now at their lowest level since before the full-scale invasion of Ukraine began in February 2022. Gold prices hit record levels earlier this year, with prices averaging around $4,800 (€4,210) per ounce in the first four months before falling back to a current level of around $4,000 per ounce. Moscow's sell-off is likely to have raised more than $5 billion. "The fact that they're selling gold means that they're running out of other more liquid assets," Elina Ribakova, an economist with the Peterson Institute for International Economics, told DW. "So there is pressure on the deficit and also pressure on the sources to finance this deficit." Budget problems Russia's budget has been under serious strain in recent years due to its massively increased defense spending, which funds the war in Ukraine. Earlier this year, the Financial Times reported that the country's finance ministry had warned the cabinet in a letter that overspending on the war would be at least $28 billion in 2026, with further overspends expected in 2027 and 2028.
Defense spending has more than quadrupled since 2021. It totalled around 16 trillion rubles in 2025 ($204 billion; €178 billion). Chris Weafer, a Moscow-based financial analyst with the consulting firm Macro-Advisory, says that while the Russian gold sell-off is significant, it is not a case of panic selling. "It's an extraordinary situation, but it's a relatively normal trend," he told DW. "It doesn't represent any element of Russia going broke, running out of money, not having anything else and literally selling the household silver." He says that the gold Russia has offloaded has mostly been sold by the country's finance ministry, via its Welfare Fund (NWF), rather than the Russian Central Bank. "Since early 2022, gold was one of the assets that the Welfare Fund could buy, because US treasuries and bunds weren't available to them (as a result of sanctions following the invasion of Ukraine)." Weafer pointed out that the asset had become a key liquid component of the fund, which, he said, was precisely what a national welfare fund is intended for: to be sold when funds are needed, particularly during difficult times. "To that extent, one can argue it is serving the intended purpose." The fund's gold sale is intended to replenish its so-called liquid assets. Weafer estimates that the fund is worth approximately $150 billion, with around $50 billion of that being described as "liquid." "The Kremlin doesn't want that buffer to go down because that would lead to maybe more speculation about financial crisis or economic difficulties, and it would undermine the Kremlin's geopolitical position," said Weafer. "It likes to portray the country as being very stable and very strong, and that $50 billion of cash is an important part of that." He says another important factor to consider is that as one of the world's biggest producers of gold, Russia can replenish stocks it has sold relatively quickly by buying from its domestic producers.
The BriefWire