Russia and Kazakhstan reduce gold reserves as China increases purchases

Russia has been selling off its gold reserves at a rapid pace throughout the year, with a reduction of approximately 62 tonnes since January. This trend is driven by a significant budget deficit resulting from the war in Ukraine and the need to increase funding for the defense sector. These sales are occurring outside the official London bullion market, primarily through Hong Kong, where the People's Bank of China has emerged as the main buyer. Between January and July, approximately 100 tonnes of Russian gold reached Hong Kong, nearly triple the amount seen during the same period last year.

Similarly, Kazakhstan has announced plans to reduce its gold holdings by the end of the year, aiming to cap gold at 75% of its total foreign exchange reserves. This marks a shift for the country, which has been one of the world's largest gold buyers in recent years. Experts suggest these moves by both nations may be temporary measures to address budget deficits or to realize profits.