Russia's gold reserves surge: Why Putin has to thank Donald Trump

Contents

• Why reserves increase
• Why Russia's gold reserves are not frozen
• Russia's gold reserve continues to rise in value

Over three years of war in Ukraine, Russia has effectively covered nearly a third of its frozen assets in "unfriendly countries" by relying on its gold reserve. In 2021, the share of gold in Russia’s international reserves was around 21% or 2,295 tons. At that time, this amount of gold was worth $132.84 billion.

By 2025, the share of gold in Russia's reserves, according to the Russian Central Bank, had increased to 35.4% - the highest level in the past 25 years. As of March, the gold reserve in Russia stood at nearly 2,336 tons, and its value had risen by 72%, or $96 billion. According to the Central Bank, as of April 1, monetary gold in the reserves was valued at $228.95 billion. A month earlier, the amount was $217.38 billion.

Why reserves increase

The increase in Russia’s gold reserves occurred not so much due to the expansion of the metal's volume, but rather due to the rise in its price. Since 2022, the price of gold has grown significantly, reaching record levels. In mid-March 2025, the price of gold exceeded $3,000 per ounce (1 ounce = 31 grams), while at the beginning of 2022, it was around $1,800.

In conditions of inflationary risk, gold's appeal as a capital protection tool increases. Amid escalating international conflicts, investors view gold as the most reliable asset. Central banks are increasing their gold purchases to diversify reserves and reduce reliance on the US dollar.

Why Russia’s gold reserves are not frozen

In 2022, Russia’s foreign currency reserves held in accounts at foreign banks were frozen. At the same time, gold reserves were not frozen primarily because the physical gold was located within the territory of Russia in Central Bank vaults, and was physically inaccessible for sanctions. Restrictions on the use of Russian gold could only be imposed if it were physically stored abroad.

Moreover, even before 2022, Russia had been trying to reduce the dollarization of its economy - lowering the share of US bonds, transitioning to the Chinese yuan, and diversifying reserves by converting them into gold. The Central Bank began increasing the gold reserve in 2014, likely fearing sanctions due to the annexation of Crimea. From 2014 to 2020, Bloomberg reports, when the price of gold ranged from $1,100 to $1,500 per ounce, Russia increased its precious metal holdings by 40 million ounces.

Using gold as a payment instrument is significantly more convenient under sanctions. Currency transactions are monitored through international systems such as SWIFT and others - gold is not subject to such control. A country's gold cannot be frozen by the decision of other countries. Furthermore, due to weak oversight, there is the possibility of selling gold to third countries via anonymous channels and exchanges.

Russia, like the USSR, has traditionally accumulated gold as reserves, having a vast number of deposits. In 2023, gold production in Russia amounted to 321.8 tons, second only to China - 378.2 tons.

Mined gold is primarily sold to the state and only then used for other purposes, noted Doctor of Economic Sciences Oleksii Plotnikov in a comment to RBC-Ukraine.

"Even considering that gold is not the main liquid reserve and cannot be sold instantly, unlike currency, the presence of reserves in gold is a plus for the country. When currency assets are frozen, gold supports internal stability. The presence of a gold reserve helps to cope with the consequences of financial sanctions," Plotnikov explained.

Russia's gold reserve continues to rise in value

The gold reserve will help Russia manage crisis situations in its balance of payments. This will be especially relevant during a period of increased demand for gold, which is currently observed after the United States launched a global trade war.

Demand for gold has been rising since the beginning of the year amid Donald Trump's promises to pursue protectionist trade policies. Analysts attribute this to the instability that the US administration is creating in global politics and economics, prompting investors to move into conservative assets, writes DW.

While in January an ounce of gold cost about $2,700, by the end of March it was over $3,000 - a historical high. Following Trump's speech on April 2, the price of gold rose 1% to $3,146 per ounce, then stabilized at $3,142.

Institutional investors (investment banks, insurance companies, and mutual funds - ed.) amid uncertainty over future US actions will continue to view gold as a safe-haven asset during market instability. Thus, the rise in gold prices will continue.

According to the forecast by ForexClub, the price of gold in 2025 could reach $3,600 per ounce. Roughly calculated, this would increase the value of Russia’s existing gold reserves by 16% - to $260 billion.

As previously reported, gold prices hit a historical high following Russian dictator Vladimir Putin's refusal to agree to a comprehensive ceasefire in Ukraine, as proposed by the United States.

Sources: Bloomberg, Deutsche Welle, ForexClub, as well as an exclusive comment by Doctor of Economic Sciences Oleksii Plotnikov for RBC-Ukraine.