Russia Dramatically Increases Gold Purchases As Oil and Gas Revenue Surges

The Russian Finance Ministry has announced a substantial increase in its gold purchases starting September 6, 2024. This decision comes as the country experiences a surge in oil and gas revenue, highlighting Russia’s ongoing efforts to diversify its financial reserves and reduce its dependence on the US dollar.

According to recent reports from Russian news agencies TASS and Interfax, the Finance Ministry plans to allocate 172.9 billion rubles ($1.9 billion) for the purchase of foreign currency and gold over the next month. This marks a dramatic increase from the previous period, with daily purchases set to rise from 1.12 billion rubles to 8.2 billion rubles — a nearly sevenfold increase.

The decision to ramp up gold purchases is largely attributed to an expected windfall in oil and gas revenue. The Finance Ministry anticipates revenue of 162 billion rubles in September, a substantial jump from August’s 10.9 billion rubles. This influx of funds has enabled Russia to significantly expand its gold-buying program.

Russia’s focus on gold is not a new development. Since the onset of the Ukraine conflict in early 2022, the country has been working to strengthen the link between the ruble and gold, effectively creating a new gold standard. This strategy aims to insulate the Russian economy from transactions requiring US dollars, a policy that has been in development since 2013.

As the world’s second-largest gold producer, trailing only China, Russia is well-positioned to leverage its domestic gold resources. In 2023, the country produced 321 metric tons of gold, further bolstering its ability to accumulate the precious metal.

The Central Bank of Russia has been a consistent net purchaser of gold throughout 2024, although additions to its reserves have been modest, with only about 4 tonnes added so far this year. However, this latest announcement suggests a more aggressive approach to gold acquisition in the coming months.

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