Russia Unloads Gold Reserves Amid Soaring Defense Spending

Russia has been selling off its gold reserves at an unprecedented rate in 2026 to offset a massive budget deficit. According to the Russian Central Bank, the country's gold reserves have declined by around 43.5 metric tonnes since January this year, reaching their lowest level since before the invasion of Ukraine began in February 2022.

The gold sales are likely to have raised over $5 billion for the Kremlin, which is struggling to fund its massive defense spending. The country's finance ministry has warned that overspending on the war could reach at least $28 billion this year, with further overspends expected in 2027 and 2028.

Economist Elina Ribakova notes that Russia's gold sales indicate pressure on the deficit and a need for new sources of financing. However, Chris Weafer, a Moscow-based financial analyst, disputes the idea of panic selling, arguing that the gold offload is a normal trend to replenish the National Welfare Fund's liquid assets.

Weafer points out that Russia can easily replace its sold-off gold by buying from domestic producers, given its status as one of the world's largest gold producers. The economist also notes that improved oil and gas revenues have helped Moscow offset budget difficulties so far this year.