Russia's central bank scraps gold buying at fixed price for 'negotiated price' after ruble returns to pre-invasion levels
(Kitco News) The Russian central bank will stop buying gold at a fixed price from local banks starting April 8 and continue its purchases at a "negotiated price." The move comes after Russia's ruble recovered to pre-invasion levels.
The country's central bank cited a "significant change in market conditions" in its Thursday announcement.
"From April 8, 2022, the purchase of gold by the Bank of Russia will be carried out at a negotiated price," the statement said.
At the end of March, Russia's central bank resumed its gold purchases from local banks and said that it would be buying the precious metal at a fixed price of 5,000 roubles between March 28 and June 30. This was around $52 per gram at the time and below the market value of around $68.
The central bank added that the resumption in buying will ensure supply and uninterrupted production of local gold.
Since then, the ruble has risen back to pre-invasion levels. In February, the ruble collapsed from 79 to the dollar to as low as 139 to the dollar. On Friday, the ruble was back at 77 to the dollar. The recovery came following Russia's actions against Western sanctions, including forcing companies to exchange 80 percent of foreign currency for rubles.
The country's central bank also cut its key rate to 17% from 20% on Friday in light of the higher ruble. "Financial stability risks are still present, but have ceased to increase for the time being, including owing to the adopted capital control measures. There is a steady inflow of funds to fixed-term deposits," the statement said.
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With a recovering ruble, Russia is looking for a better price to buy the local gold at. With the higher currency, 5,000 rubles now translates to $63. Meanwhile, the price of gold has been fairly stable, holding above $1,900 an ounce or $68 per gram. June Comex gold futures were last at $1,946.10, up 0.43% on the day.
Even though Russia is one of the world's biggest gold producers, most of the locally-produced volume stays in the country, especially after Russian refiners were banned from selling their bullion into the London market.