After two years, the Bank of Russia says it will start buying gold again. This comes after a long-running buying spree that helped keep gold prices high last decade.
Gold will be bought again by the central bank on the domestic market for precious metals, it said. The move comes after the country’s monetary authority and some of its commercial banks were put on a list of things they couldn’t do because of Russia’s attack on Ukraine.
The Bank of Russia bought a lot of gold over the course of six years. It doubled its gold holdings and became the biggest buyer for the government. It came to an end in March 2020, when prices rose at the start of the pandemic. Since then, the stockpile has stayed about the same. At a time when investors weren’t willing to buy, the Russian purchases were a big help for the market.
Gold went up and down a lot last week because investors looked for safe haven assets after Russia invaded Ukraine and then fell back when Western countries imposed sanctions. As of 10:34 a.m. in Singapore on Monday, the price of gold was $1,910.11 an ounce. This month, the price has gone up more than 6%.
People who work for a company called MKS PAMP SA say that Russia will keep taking gold from its own mines to build its war chest, and that’s going to be seen as a good thing by the market at first. But the point of buying gold in the home market is to sell it when needed, she said.
“It doesn’t matter that gold will likely be sold to other bad people, off-market, so it won’t be part of global flows,” Shiels said. A fall in the ruble will make Russia more likely to sell gold, says the woman.
It has been a big source of demand for bullion in the last year, along with a surge in demand from Asian jewellery buyers. As of 2021, the World Gold Council says that the amount of gold held by central banks increased by more than 80% from the year before.
In January, the International Monetary Fund said that Russia had more than 2,000 tonnes of gold, which made up about 20% of its reserves at the end of the month. It’s the fifth-largest sovereign gold owner in the world.
(The comment in the fifth paragraph has been changed, and prices and data have been updated as well)
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