Russia Just Made a Huge Gold Purchase

After a low purchasing month, Russia returns with an acquisition of 700,000 ounces of gold in May.


Russia makes huge gold purchase


After adding an unusually-low 6.1 tons of gold to its stockpile in April, Russia’s central bank returned to form in May with a purchase of 21.8 tons, or 700,000 ounces, of gold. The newest acquisition brings Russia’s gold stockpile to 1,708 tons, amounting to a value of $69.3 billion.

Russia is known as a voracious gold buyer, remaining only slightly behind China on the list of the world’s biggest gold owners. If both countries continue to report that they’re acquiring gold at the same rate, Russia should bump China down to the sixth spot on the official list late this year or early next.

Despite its status as the world’s top gold consumer, China hasn’t reported any gold purchases in the last few months. Many believe that China has secretly been acquiring gold for some time while under reporting both their gold purchases and their stockpile, which are thought to significantly exceed official numbers.

Several things lie behind Russia’s perennial status as the top gold buyer in the world. Vladimir Putin has expressed an appreciation of physical gold while downplaying the dollar’s value, and the Kremlin continues to convert its dollar currency holdings into bullion. The metal’s performance could also be another motivator, as gold continues to rise amid a sinking dollar.

In a recent report, British multinational bank Standard Chartered provided a forecast for gold, stating that it’s unlikely for the metal to test lows this year.

Instead, the bank’s precious metals analyst, Suki Cooper, predicted that gold will reach $1,300 an ounce by year’s end, listing numerous supportive factors that should propel the metal to new heights.

One supporting factor cited by Cooper is the Federal Reserve’s dovish stance towards hiking interest rates, as higher rates are generally seen as inhibitive for gold’s growth. The current status of 10-year U.S. Treasury yields is another tailwind for the metal; increases in returns are less and less likely and, with the Fed continuing to experiment with negative territory, investors will have to look elsewhere.

Cooper also lists India’s Goods and Services Tax as a means for gold to get even more upside. Initially, some market watchers felt that the tax could significantly change the country’s gold market, but now it seems that it will only cause a temporary stir.

Standard Chartered’s report notes that President Trump might not be able to go through with a significant fiscal stimulus package as promised, which would be another setback for his administration. This should keep gold’s lowest levels between $1,220 to $1,240, the authors of the report believe, as the metal continues its rise towards the $1,300 mark.