The Bank of Russia has sold 27.9 tonnes of gold since January — the fastest drawdown in more than two decades — as the Kremlin reaches deeper into one of its last freely accessible reserves to cover a war budget that has outpaced every other line item in the federal accounts.
Holdings fell 900,000 ounces in the first four months of the year, landing at 73.9 million ounces as of May 1, the lowest level since February 2022. April alone accounted for 200,000 ounces of that drop, the fourth consecutive monthly decline. At an average price of roughly $4,800 per ounce across the period, the selldown generated approximately $4.3 billion in proceeds.
To put the pace in context: the 27.9-tonne reduction is 3.5 times larger than a 7.7-tonne drop recorded in July 2005, previously a notable outlier. Before this year, the central bank rarely allowed monthly reductions to exceed 100,000 ounces outside of coin-minting operations.
The pressure driving those sales is the federal budget. Russia’s deficit hit 4.6 trillion rubles ($51.1 billion) by the end of March, and the full-year shortfall is on track to nearly double the prior year’s figure. War spending crossed a grim threshold in early March, officially surpassing all social welfare allocations combined.
“First of all, this is to cover the budget deficit, which reached 4.6 trillion rubles ($51.1B) by the end of March,” said Natalia Milchakova, analyst at Freedom Finance Global. “Without partial compensation from the Central Bank amid modest oil and gas revenues at the beginning of the year, the figure could have exceeded 5 trillion rubles ($55.5B).”
Currency pressure is adding a second layer. Weak export income early in the year opened a domestic shortage of foreign currency, pushing the central bank to convert gold into yuan.
The mechanics of how this works are worth noting. Russia’s central bank mirrors National Wealth Fund gold and foreign currency transactions through domestic market operations — a structure previously used for yuan holdings and now applied to physical bullion. That distinction matters: where earlier adjustments to Russia’s gold line involved internal accounting, the bank began executing real market sales of physical gold at the start of the year.
The shift reflects how constrained Russia’s options have become. Approximately $300 billion in Russian foreign assets sit frozen under international sanctions, leaving the gold stockpile as one of the few reserve pools the Kremlin can actually move. Russia had built that stockpile to over 2,000 tonnes — the fifth largest in the world — before the current drawdown began.
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