Russia sold more gold than gas for the first time in 26 years

During the second quarter of 2020, gold export earnings in Russia reached $3.58 billion. For the first time in the last twenty-six years: the export of gold offered higher returns to Russia than the sale of gas.

According to statistics from the Federal Customs Service, in April and May alone, Russian companies exported 65.4 tons of gold. It translates into earnings of over $3.58 billion.

According to estimates by the Russian Central Bank, in the 2nd quarter, gas export earnings from gas pipelines generated an income of 3.5 billion dollars. This is the minimum quarterly value registered since 2002.

The UK is the leading importer of Russian gold

According to the head of the Russian rating agency ACRA, from at least 1994, the income from gold exports has not exceeded that of gas.

The primary importer of Russian gold (around 80%) remains the United Kingdom. In 2019, Russia reported a record increase in exports to this country. The value of the precious metal the country exported to the UK amounted to $5.33 billion, and all exports totaled $5.7 billion. In January-May 2020, the UK accounted for $4 billion in gold out of total Russian exports of $5.1 billion.

The increase in gold sales abroad does not fully offset the drop in oil and gas revenues, which account for more than half of exports, said Egor Susin, head of the Gazprombank strategy development center. According to their estimates, gold exports can compensate for less than 10% of the lost revenue from the sale of oil and gas in 2020.

The central bank’s refusal to buy gold is a type of measure to support Russian companies’ and banks’ export earnings, Susin said. 

Gold is about to reach its record highs

Gold prices rose and continue to grow. According to Citigroup Inc., bullish sentiment in the precious metals sector will take gold prices to their all-time highs. The upward move is only a matter of time.

Now gold has to beat $1,920, the all-time high reached in 2011. August gold features traded near nine-year highs at $1,840.80, a 1.29% increase on the day.

Citigroup anticipates that gold is likely to reach its record highs in the next six to nine months. Besides, analysts see a chance for the precious metal to touch $2,000 an ounce in the next three to five months.