In a significant shift in economic strategy, Russia has begun selling gold from its central bank reserves for the first time in over two decades.
The move comes as the country faces increasing financial pressure due to its prolonged conflict with Ukraine.
According to reports, Russia sold around 14 tonnes of gold in just two months - January and February 2026. This marks the largest two-month sale since 2002 and highlights the growing strain on the country's finances.
First Major Gold Sale in 25 Years
For years, Russia had steadily increased its gold reserves as part of a long-term strategy to reduce dependence on the US dollar and protect its economy from Western sanctions. Traditionally, transactions between the finance ministry and central bank were largely on paper, without physically moving gold.
However, this time, the central bank has directly sold physical gold in the open market. This marks a clear departure from its earlier approach and signals a more urgent need for liquidity.
As a result of the recent sales, Russia's gold reserves have dropped to about 74.3 million ounces - the lowest level in four years. Despite this, the country still holds over 2,000 tonnes of gold, making it one of the largest holders globally.
War Expenses and Budget Deficit Driving the Move
The ongoing war with Ukraine has significantly increased government spending, especially on military operations. At the same time, Russia is dealing with a widening budget deficit.
Experts estimate that the country ended 2025 with a budget deficit of around 2.6% of its GDP, much higher than the earlier projection of 0.5%. Some analysts believe the real deficit could be even higher, as certain expenses have been pushed into future budgets.
Selling gold appears to be one of the fastest ways for the government to raise cash and manage immediate financial needs.
Falling Energy Revenues Add to Pressure
Russia's economy has traditionally relied heavily on income from oil and gas exports. However, this revenue stream has weakened in recent years due to falling global prices and sanctions imposed by Western countries.
Energy taxes now contribute only about 20% to government revenue, significantly lower than before the Ukraine conflict. This decline has forced the government to explore alternative sources of funding.
Strategic Move or Emergency Measure?
Some experts believe that the timing of the gold sale may also be strategic. Global gold prices have recently surged, crossing $5,000 per ounce, making it a favorable time to sell and maximize returns.
Even so, the decision to sell physical gold once considered a long-term strategic asset suggests deeper economic stress. Russia still has large reserves, but continued military spending could push it to sell more gold or adopt other funding measures such as issuing bonds or increasing taxes.
Overall, this move reflects the growing financial challenges faced by Russia as the war continues, and it raises questions about how long the country can sustain its current level of spending.
News24 Report
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