Why is Russia selling its gold?

Russia has been selling off its gold reserves in 2026 in an effort to raise funds to cover a substantial budget deficit. As of the beginning of July, Russia's gold reserves stood at 73.4 million troy ounces, a decrease of around 43.5 metric tonnes since the start of the year. This makes Russia's gold reserves the lowest they have been since before the full-scale invasion of Ukraine began in February 2022.

Gold prices hit record highs earlier this year, averaging around $4,800 per ounce, before falling to a current level of about $4,000 per ounce. The Kremlin's decision to sell its gold may have generated over $5 billion in cash. Elina Ribakova, an economist with the Peterson Institute for International Economics, explained that Russia is running low on other liquid assets, which puts pressure on the budget deficit.

Russia's defense spending, which funds the war in Ukraine, has been heavily strained, with overspending on the war estimated at $28 billion in 2026, with further overspends expected in 2027 and 2028. Chris Weafer, a financial analyst with Macro-Advisory, noted that the Russian gold sell-off is significant but not indicative of panic selling.

The gold Russia has sold has mostly been acquired through the National Welfare Fund, a key liquid component intended for selling during difficult times. Weafer estimates the fund's value at around $150 billion, with $50 billion being liquid. Russia can replenish its sold gold stock relatively quickly by purchasing from its domestic gold producers.

Despite the economic difficulties, Russia can likely continue funding the war for the foreseeable future by cutting back on non-defense spending.