Russia encouraging gold exports -- to ease the squeeze?

Section:

Russian Central Bank Lowered Its Gold Purchase Price to Encourage Exports, Governor Says

By Andrey Ostroukh and Elena Fabrichnaya
Reuters
Wednesday, July 3, 2019

MOSCOW -- Russia's central bank has been buying gold on the domestic market at less than the industry benchmark to encourage Russian producers to export more of the metal, the governor told Reuters.

Russia has overtaken China to become the world's fifth largest official sector holder of gold, as Western sanctions drove buying by its central bank to record highs in 2018.

... Dispatch continues below ...



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But the central bank added a discount on May 1 to its purchase price, which was previously based on the daily London Bullion Market Association gold price. Market players had expected purchases to continue at last year's pace.

"We introduced discounts for the purchase of gold because we saw that vendors were selling gold mainly to the central bank," Governor Elvira Nabiullina said in the interview, which was cleared for publication today.

"The discount aligns domestic conditions with external ones and motivates gold producers to sell to export too," she said.

The central bank has not previously offered any detailed explanation about why it had reduced its gold price.

Since the discount was added, the bank's monthly gold purchases destined for reserves, have slowed. As of June 1, Russia's gold reserves stood at 70.4 million troy ounces, up only 200,000 ounces since the start of May, according to central bank data.

"It wasn't a special decision on our part to reduce gold purchases," Nabiullina said, adding that, although gold was relatively volatile, increasing its gold reserves helped it diversify away from U.S. dollar holdings. ...

Nabiullina denied reports the Russian central bank had taken some of Venezuela’s gold reserves to hold temporarily in Russia.

... For the remainder of the report:

https://www.reuters.com/article/russia-cenbank-gold/russia-cbank-lowered...

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