Why is Russia selling its gold?

Russia has been selling off its gold reserves in 2026, aiming to raise funds to cover a large budget deficit. The Russian Central Bank reported that the country's gold reserves dropped to 73.4 million troy ounces or 2,282 metric tons by mid-July, marking a 43.5 metric ton decline since the start of the year. This brings Russia's gold reserves to their lowest level since before the invasion of Ukraine in 2022.

Gold prices soared at the beginning of 2026, averaging around $4,800 per ounce before settling at around $4,000 per ounce currently.

Economist Elina Ribakova from the Peterson Institute for International Economics says that Russia's sell-off of gold occurred as the country was running out of liquid assets to finance its budget deficit. Russia's budget has been strained due to increased defense spending to support the war in Ukraine. In 2025, the defense budget reached around 16 trillion rubles, which is approximately $204 billion.

Financial analyst Chris Weafer from Macro-Advisory said that while the gold sell-off is significant, it is not a sign of panic or Russia going broke. The gold sold has mostly been by the finance ministry via its National Welfare Fund, which is intended for financial emergencies. The fund's gold sale aims to replenish its liquid assets, estimated at around $50 billion. Russia, being one of the world's largest gold producers, can replenish its gold reserves by purchasing from domestic producers relatively quickly.

The Kremlin aims to maintain a stable image and portray Russia as financially strong. However, the country's budget deficit could exceed official plans by over 1 trillion rubles ($12.85 billion) in 2026. The main source of revenue for Russia is oil and gas, and the price of oil has helped offset the deficit so far in 2026. Despite the economic difficulties, experts believe that Russia can continue funding the war for the foreseeable future by cutting back on non-defense spending.