Russian Banks Slash Gold Reserves in 2024
As of the end of 2024, physical gold reserves held by Russian banks have sharply decreased to approximately 38 tons, marking a significant decline of about 50% compared to autumn 2023. This reduction brings the volume of gold held in commercial banks to its lowest level since July 2022, according to estimates from the RBC news website.
The Russian Central Bank reported that the monetary value of precious metals accounts decreased by 23.6% in 2024, while the physical volume dropped by 46%, equating to a loss of over 33 tons. This decline is reminiscent of the sharp drop in gold reserves experienced during the COVID-19 pandemic in 2020, when Russian banks saw a decrease of 34.5 tons.
Since February 2022, specific details regarding which banks are operating with physical gold have not been disclosed. However, prior to that date, major banks involved in gold transactions included Sberbank, VTB, Gazprombank, Rosselkhozbank, Otkritiye Bank, Sovcombank, and Promsvyazbank. These banks typically handle physical gold on behalf of clients such as gold producers and refineries, accounting for it on their balance sheets before selling it to contractors, including those located abroad.
Despite the overall decline in gold reserves, market participants surveyed by RBC indicated that banks' operations with gold producers have actually increased. However, the combination of historically high interest rates set by the Central Bank and elevated gold prices has made it more profitable for banks and their clients to quickly turnover gold rather than hold it on their balance sheets. This shift in strategy has contributed to the reduced gold holdings reported at the end of the year.
The significant drop in gold reserves reflects broader economic trends and the evolving strategies of Russian banks in response to market conditions. As the financial landscape continues to change, the management of gold reserves will likely remain a critical focus for these institutions.
