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Russia’s central bank is to start buying gold after a two year hiatus as the country’s domestic producers face problems accessing international bullion markets.

In a statement, the Bank of Russia said it would “resume the purchase of gold on the domestic precious metals market”.

The move comes after the central bank and several of the country’s biggest lenders were hit by sanctions in response to Russia’s invasion of Ukraine.

Analysts have warned that Russian producers such as Polymetal or Polyus are likely to find it very difficult to sell gold in London or New York.

As such, these companies were expected to turn to the Russian central bank, which can provide the roubles they need to pay staff and supplies in exchange for gold.

The Bank of Russia owned just under 2,300 tonnes of gold at the end of November, according to the World Gold Council.

At current prices, its hoard of metal — the sixth largest in the world — is worth $153bn and accounts for roughly a fifth of the bank’s official reserves.

Following the annexation of Crimea in 2014, the central bank stepped up its purchase of gold as domestic producers struggled to sell overseas.

Between 2014 and 2019 it acquired more than 1,200 tonnes of gold, according to data from WGC.

For Moscow, the purchases were also a way of reducing the country’s exposure to US dollars in its official reserves.

The Bank of Russia halted purchases in April 2020 as oil prices dived because of the pandemic, hitting the country’s national income. It has kept its stockpile steady ever since.

“This is likely to be viewed as initially bullish by the market, but the purpose of buying gold (in the domestic market) is to monetise it when required”, said Nicky Shiels, analyst at MKS Pamp. “One builds a war chest of this size for times like these.”

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