What is the story about?
In a twist to the economic fallout from its ongoing war in Ukraine, Russia has emerged as one of the unexpected beneficiaries of a global gold rally, reaping an estimated $216 billion in gains as bullion prices have surged to multi-decade highs.
The windfall, driven by a four-year bull market in gold that began around the time of Moscow’s full-scale invasion, nearly matches the value of Russian sovereign reserves frozen under Western sanctions.
According to calculations by Bloomberg, the value of the Bank of Russia’s gold holdings has increased by more than $216 billion since February 2022, the period marking the start of the Kremlin’s large-scale military campaign in Ukraine.
Over the same period, Russia’s foreign currency and securities reserves have declined by roughly 14 per cent, while gold has come to account for 43 per cent of total international reserves, up sharply from about 21 per cent before the war.
By the end of last year, the country’s international reserves stood at about $755 billion, of which $326.5 billion was held in gold.
Western nations, led by the United States and the European Union, froze an estimated $300 billion of Russian central bank assets in response to the Ukraine invasion, a move which was designed to starve Moscow of financial firepower. EU freeze orders alone totalled about roughly $244 billion of sovereign assets held within the bloc.
Gold, which largely sits outside Western banking systems, has given Russia another source of value. Unlike cash and securities trapped by legal and regulatory restrictions, gold has intrinsic worth. In theory, it can still be converted into money, although sanctions and limited access to markets make this difficult.
Gold has rallied sharply over the past four years, with prices surpassing $4,700 an ounce amid persistent inflation, elevated geopolitical tensions and robust demand from central banks for safe-haven assets.
In 2025 alone, bullion recorded its strongest annual gain since 1979, rising roughly 65 per cent on the year.
Central banks across Asia, the Middle East and beyond have added gold to diversify away from the US dollar and other fiat currencies, a trend that has been reinforced by fears over currency stability and sanctions risk.
Russia, which produces more than 300 tonnes of gold annually, is among the top global miners, but its bullion has been barred from Western markets and delisted by the London Bullion Market Association since 2022.
Western policymakers and Ukrainian allies had viewed the freezing of Russian reserves as a potent tool to constrict Moscow’s finances and pressure it to end the war. Yet the gold windfall has undercut that strategy, fuelling criticism that sanctions have had unintended consequences by indirectly amplifying the value of Russia’s remaining assets.
While frozen assets remain inaccessible, the surge in gold value has restored much of Russia’s financial muscle, enabling it to shoulder fiscal pressures and sustain the war effort.
Some European officials have suggested using frozen Russian sovereign funds to help rebuild Ukraine. However, the idea is legally complex and has triggered diplomatic disputes and court challenges.
In Moscow, officials have welcomed the rally as vindication of a longstanding strategy to accumulate hard assets and diminish reliance on Western financial systems. The Russian Finance Ministry recently forecast that gold could reach $5,000 an ounce if current trends persist, a projection that would further fortify the value of its reserves.
The episode underscores a broader shift in how reserve assets are managed in an era of geopolitical fragmentation. With traditional reserve currencies under strain and sanctions weaponised as a tool of statecraft, gold has reasserted itself as an anchor of financial security.
For Russia, the surge in gold prices provides both symbolic and financial relief from external pressure, even as the war in Ukraine grinds on and diplomatic isolation deepens. For the rest of the world, it serves as a warning that markets can sometimes undermine the very policies meant to restrain aggression.
The windfall, driven by a four-year bull market in gold that began around the time of Moscow’s full-scale invasion, nearly matches the value of Russian sovereign reserves frozen under Western sanctions.
According to calculations by Bloomberg, the value of the Bank of Russia’s gold holdings has increased by more than $216 billion since February 2022, the period marking the start of the Kremlin’s large-scale military campaign in Ukraine.
Over the same period, Russia’s foreign currency and securities reserves have declined by roughly 14 per cent, while gold has come to account for 43 per cent of total international reserves, up sharply from about 21 per cent before the war.
By the end of last year, the country’s international reserves stood at about $755 billion, of which $326.5 billion was held in gold.
Sanctions backfire? Gold gains offset frozen assets
Western nations, led by the United States and the European Union, froze an estimated $300 billion of Russian central bank assets in response to the Ukraine invasion, a move which was designed to starve Moscow of financial firepower. EU freeze orders alone totalled about roughly $244 billion of sovereign assets held within the bloc.
Gold, which largely sits outside Western banking systems, has given Russia another source of value. Unlike cash and securities trapped by legal and regulatory restrictions, gold has intrinsic worth. In theory, it can still be converted into money, although sanctions and limited access to markets make this difficult.
Why gold prices have soared
Gold has rallied sharply over the past four years, with prices surpassing $4,700 an ounce amid persistent inflation, elevated geopolitical tensions and robust demand from central banks for safe-haven assets.
In 2025 alone, bullion recorded its strongest annual gain since 1979, rising roughly 65 per cent on the year.
Central banks across Asia, the Middle East and beyond have added gold to diversify away from the US dollar and other fiat currencies, a trend that has been reinforced by fears over currency stability and sanctions risk.
Russia, which produces more than 300 tonnes of gold annually, is among the top global miners, but its bullion has been barred from Western markets and delisted by the London Bullion Market Association since 2022.
Sanctions under strain as gold rally blunts Western pressure
Western policymakers and Ukrainian allies had viewed the freezing of Russian reserves as a potent tool to constrict Moscow’s finances and pressure it to end the war. Yet the gold windfall has undercut that strategy, fuelling criticism that sanctions have had unintended consequences by indirectly amplifying the value of Russia’s remaining assets.
While frozen assets remain inaccessible, the surge in gold value has restored much of Russia’s financial muscle, enabling it to shoulder fiscal pressures and sustain the war effort.
Some European officials have suggested using frozen Russian sovereign funds to help rebuild Ukraine. However, the idea is legally complex and has triggered diplomatic disputes and court challenges.
In Moscow, officials have welcomed the rally as vindication of a longstanding strategy to accumulate hard assets and diminish reliance on Western financial systems. The Russian Finance Ministry recently forecast that gold could reach $5,000 an ounce if current trends persist, a projection that would further fortify the value of its reserves.
Gold’s return reshapes reserve strategy in a fractured world
The episode underscores a broader shift in how reserve assets are managed in an era of geopolitical fragmentation. With traditional reserve currencies under strain and sanctions weaponised as a tool of statecraft, gold has reasserted itself as an anchor of financial security.
For Russia, the surge in gold prices provides both symbolic and financial relief from external pressure, even as the war in Ukraine grinds on and diplomatic isolation deepens. For the rest of the world, it serves as a warning that markets can sometimes undermine the very policies meant to restrain aggression.
