Gold Struggles to Rally as Russia's Central Bank Bullion Drops to 2019 Level

The PRICE of GOLD bounced from 1-week lows in London on Wednesday, still trading 1.3% lower from last Friday as AI tech stocks also tried to rally, borrowing costs rose further for Europe's beleaguered governments, and new data showed the Central Bank of Russia selling gold at the fastest pace since its turn of the millennium debt and economic crisis as Moscow continues its war in Ukraine.

The Kremlin has already out-spent its total 2026 budget by almost 2/5ths according to analysis from the intelligence services in Kyiv.

Taking Russia's 2026 gold sales to 62 tonnes so far, the CBR last month sold another 6 tonnes of gold according to mining-industry group the World Gold Council.

That puts the CBR on track for the heaviest annual liquidation since it sold 79 tonnes in 2000 having sold 118 tonnes between June and September 1998 alone, when the country's attempt at post-Soviet economic reforms saw the economy collapse, forcing the government to default on part of its debts and stop trying to defend the Ruble on the FX market.

Gold in London today traded around $4130 per troy ounce after dropping as low as $4107 overnight, when gold in Shanghai fixed at a new 10-week low beneath ¥885 per gram, slashing its Dollar-equivalent premium over London quotes to just $3 per ounce.

The lowest incentive in a week for new imports into No.1 gold consumer China, that was sharply down from Tuesday's Shanghai gold premium and less than half the typical level.

China's CSI300 share index today fell to a new 14-month low, down by almost 1/5th from mid-June's 4.5-year peak. But Korea's AI tech-heavy equity market rose, and US tech stocks TSLA and SPCX both rose sharply after jumping in overnight trading following a claim from CEO Elon Musk that he wants to merge the electric carmaker with the space rocket maker and operator.

Polling for start-November's US mid-term elections meantime continued to say President Trump's Republican Party will lose control of the Senate to the Democrats, while US diesel pump prices have eased only 20 cents a gallon to $6.31 from last month's record despite him removing sanctions against Russian exports of the fuel last week.

US special envoy Steve Witkoff today called Russia's President Putin a "humanist" to whom he expressed "respect" at a face-to-face meeting in St.Petersburg, thanking Putin today for releasing 74-year old American citizen Stephen Hubbard after 4 years in captivity for allegedly serving in a Ukrainian defence unit.

Witkoff met in Oslo on Tuesday with Ukraine's President Zelenskyy, "not a good guy for us to deal with" according to President Trump.

Russia killed at least 328 civilians and injured over 2,100 more in Ukraine last month according to data verified by the United Nations.

Now back down to 2019 levels by weight beneath 2,265 tonnes, the Central Bank of Russia's gold reserves grew to the 5th largest sovereign state holdings in the world over the 5 years preceding that thanks to accumulating more than 85% of world No.3 gold mining nation Russia's output in exchange for Rubles during the Crimea sanctions of 2014-2018.

The Russian central bank then continued its purchases after Putin's full Ukraine invasion attempt began in early 2022. But with the CBR's total gold reserves now more than 71 tonnes below mid-2024's modern record high, Russia's Ministry of Finance has also sold gold since the current Ukraine war began, raising perhaps $17 billion of funds by the end of 2025.

With Russia as the world's 2nd largest producer of crude oil, the price of global benchmark Brent today fell for the 3rd session running, slipping below $109 per barrel on December futures at the ICE derivatives exchange.

Global stock markets rose for the 3rd session in a row and UK and US government bond yields edged lower. But European borrowing costs rose again, taking France's 10-year OAT yield towards quarter-century records above 5.00% per annum after the weekend's cost-of-living and anti-austerity protests ended with widespread riots and looting.

Russia's turn of the century gold sales came as Western central banks also sold gold, with liquidation in 1998 from Australia, Belgium, the Netherlands and Canada equalling 1/6th of that year's global gold mining output according to CBR analysis at the time.