Gold ingots sit for sale at the Moscow headquarters of Sberbank. Russia's central bank bought 9.4 tons of gold in July, and the metal now accounts for 9.7 percent of Russia's foreign reserves. Photo: Bloomberg

RUSSIA added about 9.4 tons of gold valued at $400 million (R4.2 billion) to its reserves last month as it expanded holdings for a fourth consecutive month to the highest in at least two decades.

The country’s stockpile, the fifth-biggest, increased to 35.5 million ounces (1 104 tons) last month from 35.2 million ounces at the end of June, data posted on the central bank’s website showed. The amount of gold now held is the most since at least 1993, according to International Monetary Fund (IMF) data.

Russia’s reserves, which overtook those of Switzerland and China this year, have almost tripled since the end of 2005, IMF data show. The rouble has declined about 6.3 percent against the dollar since June as the stand-off with the West intensified. The conflict, stemming from President Vladimir Putin’s annexation of Ukraine’s Crimea peninsula in March, has led to sanctions that have hurt trade and threatened to send Russia’s $2 trillion economy into a recession.

“Russia has been the largest official buyer for years,” Eugen Weinberg, the head of commodities research at Commerzbank in Frankfurt, said yesterday. “It’s a part of its long-term strategy of amassing gold reserves and diversifying its foreign exchange reserves.”

European leaders are pushing to halt the conflict that has killed more than 2 000 people and fractured Ukraine. The civil war, which Ukraine and its allies say is being fuelled by Putin’s support for insurgents and which Russia denies it is involved in, has helped gold rise 7.7 percent this year on demand for a haven. The metal averaged $1 311.82 last month, valuing Russia’s gold addition at $398m.

Weinberg said: “Especially

given the current relations cool down with the West and re-orientation to the East, it might be expected that the share of euros and dollars [in reserves] fall further and yuan and probably gold increase further.”

The World Gold Council said last week that central banks might add as much as 500 tons of gold to reserves this year. Nations increased holdings by 409 tons last year and 544 tons in 2012.

Gold accounts for about 9.7 percent of Russia’s total reserves, according to the London-based gold industry body. That compares with about 70 percent for the US and Germany, the biggest bullion holders, the data show. Italy and France have the next largest reserves.

Russia mined 248.8 tons of gold last year, ranking it as the third-biggest producer, exceeded only by China and Australia, according to Gold Field Mineral Services, a research unit of Thomson Reuters. – Bloomberg