Kremlin begins record-breaking gold sell-off from central bank reserves

According to the World Gold Council (WGC), Russia's central bank sold 21.77 tonnes of gold from its reserves during the second quarter. This far outpaced the Central Bank of Turkey, which was the second-largest seller with a modest 4.23 tonnes.

Other central banks sold only minor amounts of gold, including Mexico at 0.1 tonnes, Malta at 0.03 tonnes, and Romania at 0.01 tonnes, according to WGC data. Meanwhile, the largest buyers were the central banks of Poland, which purchased 50.79 tonnes, China at 32.97 tonnes, and Uzbekistan at 16.17 tonnes.

The Russian Central Bank is offloading gold primarily to cover the state budget deficit and address shortages in foreign currency liquidity, according to Finam analyst Alexander Potavin. The central bank's own data reveals it sold 1.6 million troy ounces (49.7 tonnes) from its reserves between the beginning of the year and the end of July.

This marked the largest single-instance sale of gold reserves since the 1998 default, when Russia sold off 3.8 million ounces (118 tonnes) over a three-month period amid the collapse of the GKO government bond pyramid scheme, according to International Monetary Fund statistics. As of August 1, the central bank’s gold reserves fell to 73.2 million troy ounces – the lowest level since 2020.

The Kremlin's decision to sell off gold indicates that it is running out of other liquid assets, according to Elina Ribakova, an economist at the Peterson Institute for International Economics. During the opening days of the war with Ukraine, Russia's central bank lost access to $300 billion in foreign exchange reserves after Western nations sanctioned assets held in dollars, euros, and other currencies. Only about $100 billion remains of its foreign currency holdings, which are held entirely in Chinese yuan.

The pressure on the central bank’s gold reserves highlights growing strains from Russia’s budget deficit and the challenges of financing it, Rybakova noted. According to the Ministry of Finance, the federal treasury deficit reached 6.45 trillion rubles ($75 billion) from January to July, up from 5.7 trillion rubles ($66 billion) during the same period last year.

Nevertheless, the gold sell-off does not mean Russia is bankrupt, emphasized Chris Weafer, an analyst at Macro-Advisory. The Russian central bank still holds the world's fifth-largest gold reserve, which has shrunk by only 2.1% so far. At the current rate of 200,000 to 300,000 ounces per month, it would take about 20 years to sell off the entire reserve completely.

The central bank will likely continue selling gold, according to Potavin. At the beginning of the year, the precious metal accounted for 48% of Russia's reserves, but that share has now fallen to 41.5%. “The threshold could potentially be around 40% or slightly lower. However, as long as there is a need to cover a significant budget deficit, the share of gold in the reserves may continue to decline,” Potavin said.

Earlier reports indicated that Russia's central bank had sold 21.772 tonnes of gold since the beginning of 2026 to finance the budget deficit, which reached 4.6 trillion rubles ($53 billion) by the end of March due to low oil and gas revenues early in the year.

By April 1, 2026, Russia's gold reserves had decreased by 0.7 million troy ounces to 74.1 million troy ounces, including a drop of 0.2 million ounces in March.

Russia's gold reserves plummeted to a six-year low in August 2026.