What is the role of gold in Russia’s wartime trade relations?

By Inês Trindade Pereira & video by Mert Can Yilmaz

Gold has become a significant strategic resource for the Russian government since the invasion of Ukraine. 

According to the latest RAND Europe research, Russia has been using gold as a means to obtain hard currency, weapons and other goods, especially from countries like China, Turkey and Iran. 

Between November and December 2023, Russia was the world’s fifth-largest holder of gold reserves, with more than two thousand tonnes. The US took first place with 8,133.5 tonnes, followed by Germany with 3,352.6 and Italy and France with 2,451.8 tonnes and 2,437.0 tonnes, respectively.

"By the time of Russia's full-scale invasion of Ukraine in February 2022, it had been acquiring gold at a faster rate than any other country for a decade. Russia had created one of the largest gold reserves in the world and it planned to become the world's foremost gold producer," said John Kennedy, a research leader in RAND Europe's Defence and Security programme.

EU sanctions against Russia

Western sanctions have successfully disrupted Russia’s ability to trade in gold, as well as other precious metals and stones. Sanctions have also contributed to slowing gold production within Russia.  

Before the invasion of Ukraine, Germany was the largest supplier of vital foreign mining equipment to Russia, as much as 29% of the total, while the US was responsible for 21%.

Now, given Russia’s outdated mining equipment from the Soviet period, it is far more reliant on supplies from China, which is making Russian gold producers unable to keep up with demand. 

"Right now, Moscow is using gold to prop up its wartime economy and bolster access to crucial goods, while holding considerable influence over the production of gold in Central Asia and Africa," said Kennedy.

"Gold is a crucial feature of Russia's hybrid threat, and it is important Western governments are aware of this as they seek to maintain pressure on Moscow."