Russia Sells Gold Reserves to Fund Budget Deficit Amidst War Spending

Russia has been selling substantial amounts of its gold reserves in 2026 as the Kremlin seeks to generate cash to address a significant budget deficit. The Russian Central Bank recently announced that its gold reserves stood at 73.4 million troy ounces, or 2,282 metric tons, at the beginning of July. This figure represents a decrease of approximately 43.5 metric tons since the start of the year, marking the lowest level since before the full-scale invasion of Ukraine in February 2022.

Gold prices reached record highs earlier in 2026, averaging around $4,800 per ounce in the first four months before settling near $4,000 per ounce. This sell-off by Moscow is estimated to have generated over $5 billion. Elina Ribakova, an economist at the Peterson Institute for International Economics, commented that "the fact that they're selling gold means that they're running out of other more liquid assets." She added, "So there is pressure on the deficit and also pressure on the sources to finance this deficit."

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The fact that they're selling gold means that they're running out of other more liquid assets. So there is pressure on the deficit and also pressure on the sources to finance this deficit.

Russia's budget has faced severe strain in recent years, primarily due to massively increased defense spending to fund the war in Ukraine. Earlier this year, the Financial Times reported that the country's finance ministry had warned the cabinet that overspending on the war would exceed $28 billion in 2026, with further overspends anticipated in 2027 and 2028. Defense expenditures have more than quadrupled since 2021, totaling approximately 16 trillion rubles ($204 billion) in 2025.

Chris Weafer, a Moscow-based financial analyst with Macro-Advisory, characterized the gold sell-off as significant but not indicative of panic. "It's an extraordinary situation, but it's a relatively normal trend," he told DW. "It doesn't represent any element of Russia going broke, running out of money, not having anything else and literally selling the household silver." Weafer explained that the gold sales have primarily been managed by the finance ministry through its National Welfare Fund (NWF), rather than the Central Bank. Since early 2022, gold has been a permissible asset for the NWF to purchase, especially as U.S. treasuries and bunds became unavailable due to sanctions. Weafer noted that gold has become a key liquid component of the fund, serving its intended purpose of being sold when funds are needed, particularly during difficult economic times.

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It's an extraordinary situation, but it's a relatively normal trend. It doesn't represent any element of Russia going broke, running out of money, not having anything else and literally selling the household silver.