Russian Central Bank halts purchases of gold from banks to meet household demand

Reuters ^ | 03/15/2022

[SeekAndFind]

The Russian central bank said it will suspend the buying of gold from banks from Tuesday to meet increased demand for the precious metal from households, its latest attempt to weather the storm on Russian markets in the face of Western sanctions.

"Currently, households' demand for buying physical gold in bars has increased, driven, in particular, by the abolition of value-added tax on these operations," the central bank said in a statement.

The central bank raised the key rate to 20% from 9.5% on Feb. 28 as the rouble crashed to record lows and people rushed to withdraw money from banks after the West imposed unprecedented sanctions against Russia for what the Kremlin calls a "special operation" to disarm Ukraine.

The central bank, which will next meet on rates on Friday, has also been holding daily repo auctions as lending institutions scramble to manage their liquidity.

The bank said it would suspend its gold purchases from banks from March 15, without saying how long the change would last.

Sanctions have cut Russia off from key parts of global financial markets and have frozen nearly half of the country's $640 billion gold and foreign exchange reserves, triggering the worst economic crisis since the 1991 fall of the Soviet Union.

Analysts from VTB Bank said the central bank's decision looked logical, given the loss of access to $300 billion of its reserves meant the share of gold in available reserves had risen to 40% from 21%.

"With the goal of diversifying the central bank's reserves, at the moment there is no sense in building up reserves in gold," VTB analysts said.

[algore]

If only there was some magic digital crypto goldlike stuff

[TigerLikesRoosterNew]

Household demand?

Are they talking about gold jewelry?

[CurlyDave]

...Analysts from VTB Bank said the central bank's decision looked logical, given the loss of access to $300 billion of its reserves meant the share of gold in available reserves had risen to 40% from 21%.

"With the goal of diversifying the central bank's reserves, at the moment there is no sense in building up reserves in gold," VTB analysts said...

The BS runs thick in this. Essentially bank reserves have fallen, so they want to reduce them some more.