Bank of Russia to Stop Domestic Gold Buying from April 1

The Bank of Russia announced Monday that it will suspend gold purchases on the domestic market starting April 1st, Bloomberg reported citing Russian media.

“Further decisions on gold purchases will depend on how the situation develops,” the central bank said.

The news had little to no impact on the price for the troy ounce of the precious metal. As of writing, the XAU/USD pair was down 0.68% on a daily basis at $1,620. The upbeat market mood in the American session, as reflected by strong gains in Wall Street’s main indexes, seems to be making it difficult for safe-haven gold to find demand.

Russia ’s economy is suffering as it engages in an oil price war with Saudi Arabia. West Texas Intermediate (WTI) crude oil prices fell to a fresh 17-year low Monday as prices dropped below $20 a barrel.

The announcement also comes as the coronavirus pandemic created chaos in the global gold market by grounding thousands of flights that deliver the metal to banks and dealers around the world. The breakdown in the global supply chain has caused shortages in key markets. Analysts have said that while there ’s plenty of the precious available, it’s not always in the right place.

The Russian central bank has dominated the gold market, consistently increasing its gold reserves every month for the last three years.

In the meantime, the Bank of Russia has continued to build up the gross international reserves (GIR). As of Friday, March 13, Russia’s foreign exchange reserves (including gold) reached $581 billion, their highest level since August 2008. 

However, in the last week, the regulator has begun to sell currency from its reserve to prevent rapid fluctuations in the foreign exchange market. But what selling is happening has been relatively small, of the order of $75 million a day, as the Bank of Russia remains prudent and it seems it would rather let the ruble’s value fall than burn through its reserves in an effort to maintain the currency’s value.

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