Russia’s central bank plans to restart its purchase of gold from banks beginning March 28 in a bid to “balance supply and demand in the domestic precious metals market,” and bring back a semblance of normalcy to the country’s economy.
After June 30, the purchase price of gold would be adjusted, taking into account the “emerging balance of supply and demand” in the local market.
Russian President Vladimir Putin had signed a law on March 9 that exempted individuals from paying the 20 percent value-added tax when purchasing physical gold. Demand for gold from households consequently increased, and the Russian central bank halted gold-buying from banks in mid-March to meet demand.
Russia is estimated to hold over 2,000 metric tons of gold valued at around $140 billion. This represents the fifth-largest stash of gold in the world. Gold makes up roughly 20 percent of Moscow’s total reserves. However, $300 billion of Russia’s reserves—roughly 50 percent of total reserves—have been frozen as part of Western sanctions.
G7 nations recently announced that they will be restricting the Russian central bank’s ability to use gold in transactions but Moscow is trying to circumvent the restrictions.