As Russia’s Fiscal Deficit Grows, the Kremlin Starts Selling Gold

So far this year, the Bank of Russia has divested gold amounting to about 22 tons in a bid to fund the deficit in its budget. The budget shortfall amounted to approximately $61.3 billion by March’s end due to dwindling revenues from oil and gas. 

Data on gold trading volumes on the Moscow Exchange indicates that in March, nearly 43 tons were traded. This was nearly four times what had been traded during the same month last year. This volume equated to approximately $7.1 billion, a figure that was five times the amount of money that exchanged hands for gold in March 2025. 

Freedom Financial Global’s analyst Natalia Milchakova revealed that Russia is likely to continue selling gold as financial pressures increase amid a rising budget deficit. She added that what the Kremlin is doing is no different from what other central banks, especially in developing economies, are doing at this time. 

It is also noteworthy that gold’s value has risen significantly in recent times as the price of bullion appreciated amid economic turmoil and geopolitical uncertainty. Central banks have therefore been selling some of their gold holdings in order to rebalance their portfolios to ensure that gold doesn’t take a bigger share of the country’s reserves than its allocation requires. 

According to Nikolay Dudchenko, an analyst at Finam, Russia largely ramped up its gold reserves in the period 2008 to 2012 and also in the period 2014 to 2019. Currently, the country holds bullion reserves estimated at 1,900 tons. 

Dudchenko explains that many countries are selling some of their gold reserves for a variety of reasons, such as meeting the rising cost of energy imports, currency stabilization, and to fund expenses like defense. Central banks usually buy gold when prices are relatively low and hold it in their reserves so that when prices rise and there is a cash crunch, they can sell that gold for a good return. The cash generated then addresses the funding needs of the country. 

Milchakova cited the example of Turkey as one of the countries that are selling some of their bullion reserves in order to stabilize their currencies. The ongoing global uncertainty has created conditions that make gold a valuable asset as it can be quickly liquidated to address pressing budgetary needs, she added. 

As Russia continues its campaign in Ukraine, the possibility of selling more gold or using some of the country’s yuan reserves is high given the growing fiscal deficit. The temporary lifting of sanctions on Russian oil has helped to a degree since it has come at a time when crude prices have risen significantly due to supply chain disruptions in the Strait of Hormuz. 

The bull run of gold is far from over, and gold mine development firms like Numa Numa Resources Inc. are likely to record higher levels of investor interest as the need to gain additional exposure to gold grows. 

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