Russia liquidates gold reserves to cover ballooning federal deficit

This latest reduction marks the tenth consecutive month of sell-offs by the central bank, a sharp pivot from the aggressive accumulation strategy that defined the years leading up to the 2022 invasion of Ukraine. With defense and security spending projected to consume 38% of the 2026 federal budget, the state is increasingly reliant on its precious metal assets to bridge a growing fiscal gap. The value of remaining gold reserves dropped to $301.6 billion in September, down from $333.5 billion just one month prior.

While the state liquidates its sovereign stocks, Russia remains the world’s second-largest gold producer, trailing only China. A significant portion of this output is being diverted toward international trade, particularly to China, where imports of Russian precious metal ores and concentrates jumped 80% to $1 billion during the first half of 2025. Domestically, the market is also shifting; Russian retail consumers purchased a record 75.6 tonnes of gold in 2024, signaling an attempt by citizens to hedge against economic uncertainty.