Potential New US Sanctions to ‘Paradoxically’ Boost Russia’s Gold Bullion, Report Says

According to estimates by the economic research agency Fitch Solutions, the future looks particularly bright for Russia’s gold reserves, which may see the country soon lead the rating of the top producers of the precious metal.

Russia is likely to step up its gold production in the next couple of years amid increasing risks of more US sanctions that could push the Russian Central Bank to boost the existing precious metal reserves, as follows from a Fitch Solutions report cited by CNBC.

The potential economic restrictions will “paradoxically” support the gold market in the country, the report said.

Due to the geopolitical controversies that followed Russia’s reunification with the Crimean Peninsula in 2014 based on the outcome of a referendum in which over 96 percent of Crimeans voted in favour of being part of Russia, the US imposed the first batch on sanctions on the country.

The latter partially accounted for the Russian Central Bank’s move to shore up gold bullion, which is considered to be a safe haven during economically tumultuous times.

In April, the Central Bank announced that it was halting purchases of gold. The financial watchdog’s head, Elvira Nabiullina, explained the move, arguing that Russia, currently one of the top gold producers, is now more interested in larger-scale exports in light of greater demand across the world for the precious metal.

According to Fitch Solutions, in the longer run, a “healthy” pipeline of new mining projects could propel Russia to the top spot as the world’s largest gold producer by 2029.

Gold Produced in Russia

The research agency forecast that Russia’s gold output would spike from 11.3 million ounces this year to 15.5 million in the next nine years, with the average annual growth projected to amount to 3.7%.

Conversely, China’s production, the world’s largest for the time being, is expected to stay more or less where it is between 2020 and 2029, with an average annual growth not surpassing 0.2%, Fitch Solutions noted.

Sourse: sputniknews.com