Laughing all the way to the Central Bank How skyrocketing gold prices support the Kremlin’s war machine

Gold prices continue to smash historic records. On October 16, the price of December gold futures on the New York Commodity Exchange (COMEX) rose 3.13 percent, hitting another all-time high of $4,333 per ounce. After rising 27 percent in 2024, gold prices have soared more than 50 percent so far in 2025. Experts say this upward trend is likely to continue, with some anticipating that gold could peak as high as $5,000 per ounce by the end of 2026. Against this backdrop, Kremlin officials are laughing all the way to the Central Bank. According to RBC, gold makes up about a third of Russia’s total reserves, and the most recent rally has driven the value of these holdings of roughly 2,326 tons to more than $302 billion. 

A safe haven

The steady rise in gold prices in recent years is directly linked to investor concerns about the future stability of the global economy. Crises ranging from the coronavirus pandemic to Russia’s war against Ukraine and conflicts in the Middle East have all propelled the price of gold to new heights. 

More recently, U.S. President Donald Trump’s ongoing trade war has fueled further increases, as anxious investors once again turn to gold as a “safe-haven” asset. For example, after Trump threatened China with an additional 100-percent tariff on October 10 covering a wide range of imports, global stock markets plummeted while the price of gold shot up. Concerns over the U.S. government shutdown and expectations that the Federal Reserve will slash interest rates this month are also contributing to this phenomenon. 

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That said, the Kremlin has been betting on gold for almost two decades. According to data from the World Gold Council, an international trade association, Russia became a net buyer of gold in 2006. The Kremlin then accelerated its gold purchases starting in 2014 — around the time Russia came under international sanctions over its annexation of Crimea. 

In the years since, Russia has amassed one of the largest gold reserves in the world — a cushion that has helped prop up the economy amid the Kremlin’s record spending on the war against Ukraine.

‘Russia’s strategy is now paying dividends’

Even when the Central Bank isn’t adding more physical assets to its vaults, rallying prices have pushed the value of its gold reserves steadily higher. Moreover, unlike the nearly $350 billion in Russian sovereign assets that remain frozen in banks abroad, these gold reserves are on Russian territory — out of reach of international sanctions. 

“Russia is lucky because sanctions — and preparations for them — forced it to increase the share of gold in its reserves and move away from investment in [U.S.] dollars. Accordingly, this strategy is now paying dividends,” Alfa Bank chief economist Natalia Orlova told RBC.

At the same time, the Russian Finance Ministry’s sales of gold from the National Wealth Fund — at record-high prices — are partially covering some of the ballooning federal budget deficit, which is now projected at 5.7 trillion rubles (about $71 billion), or 2.6 percent of GDP. 

As World Gold Council analyst Krishan Gopaul noted, the Russian Central Bank reported a decline in gold reserves in August, “likely related to its coin-minting program.” According to The Telegraph, Moscow sold just over three tons of gold, to the tune of around $441 million. “Putin’s war in Ukraine has helped to drive up the price of gold in a Machiavellian virtuous cycle [sic] that has benefited Russia,” wrote markets editor Chris Price. 

‘Hundreds of billions worth of bullion’

Despite international sanctions on Russian gold, higher prices are still benefiting the country’s gold mining sector, which remains primarily oriented toward exports. According to the World Gold Council, Russia was the world’s second-largest gold producer in 2024, with an output of 330 tons. Russian gold mining companies continue to sell gold at prices consistent with those on leading global exchanges, Vasily Danilov, the lead analyst at the investment firm Veles Capital, told RBC.

Veles Capital estimated Russia’s gold exports in 2024 at 256 tons, the bulk of which went to Armenia, Hong Kong, and the United Arab Emirates. While China only imported 2.8 tons of Russian gold directly, Danilov noted that “significant volumes” are likely re-exported there. “The UAE is said to be Russia’s largest hub for export routes,” Nikolay Dudchenko, an analyst at the investment company Finam FG, told RBC.

In July, Bloomberg reported that Russian precious metal exports to China, including gold and silver, had surged by 80 percent, reaching $1 billion in the first half of 2025.

Though some analysts warn that record-breaking gold prices are unsustainable, a potential dip is likely to be of little consequence for Russia. As The Telegraph’s markets editor Chris Price put it, “Barring a catastrophic and historic price crash, Putin will still have hundreds of billions of dollars’ worth of bullion to draw on.”