Turkey’s Central Bank has slashed its gold reserves by a staggering 118 tonnes over just two weeks, with last week’s drop of 69.1 tonnes alone marking the largest weekly decline since at least 2013, when data tracking began. The reserves now stand at 702.5 tonnes as authorities scramble to mitigate market turmoil driven by the ongoing Iran war.
The sell-off, which includes an estimated 26 tonnes sold outright and 42 tonnes used in swap transactions last week, is part of a broader strategy to shore up the lira and boost forex liquidity. This follows a 49.3-tonne reduction the previous week, reflecting the intense pressure on Turkey’s financial system as global energy prices spike due to geopolitical conflict. Since the war’s onset, the country has liquidated nearly 120 tonnes—equivalent to about $20 billion and six years’ worth of accumulated reserves—in a matter of weeks.
Central Bank Governor Fatih Karahan, speaking ahead of investor meetings in London, described the approach as “proactive, flexible, and controlled.” He emphasized the necessity of leveraging gold-backed transactions to manage liquidity during periods of acute forex strain.
The rapid depletion of Turkey’s $500 billion gold hoard complicates its battle against inflation, already exacerbated by external shocks. The central bank has paired these gold sales with heavy foreign currency interventions to stabilize markets, a tactic that has drawn scrutiny over its long-term sustainability.
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Market participants are now grappling with the implications of this unprecedented supply hitting the global gold market. With such a massive volume entering circulation in a compressed timeframe, questions linger about absorption capacity and potential price impacts. The scale of the transactions—70 tonnes in a single week—underscores the urgency of Turkey’s response to cascading economic pressures.
Gold remains a critical asset for Turkey, historically used as a buffer against currency volatility. Yet, the pace of liquidation, with over 118 tonnes shed by April 2, signals a deepening reliance on reserves to navigate an increasingly volatile economic landscape.
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