Gold filled the banks – Kommersant

According to the Central Bank, in April, a record was set for the sale of gold on the exchange by both citizens and gold mining companies. Market participants attribute the situation to the record price of the precious metal over the past month. At the same time, banks note that citizens continued to actively buy gold bullion in April. And experts believe that against the backdrop of global uncertainty by the end of the year, the price of gold may rise further.

The Bank of Russia published a review of the risks of financial markets for April 2023, according to which the volume of gold sold by citizens on the stock exchange for the month exceeded purchases by 1.2 billion rubles. Until now, the maximum net sales of gold by individuals on the exchange amounted to less than 200 million rubles, and this was in February last year – since then, citizens have acted only as net buyers of the precious metal. “The decline in public confidence in “toxic” currencies and the desire to diversify savings, as well as legislative relaxations, have led to an increase in citizens’ demand for gold,” the Central Bank said in a review.

At the same time, a record was set for the net sale of gold by legal entities – almost 1.8 billion rubles, while until April this figure had never exceeded 1 billion rubles. All these volumes were bought out by banks, which as a result set a record for net purchases of gold – more than 3 billion rubles. Prior to this, the record was less than 1 billion rubles. and was in January of this year.

Market participants explain this dynamics by changing the price of the precious metal. According to Irina Lozinskaya, head of the Precious Metals Operations Department at Lanta Bank, in April 2023, the price of gold exceeded the price of 5,000 rubles for the first time. per gram since April of the previous year, that is, this is the annual maximum price in rubles. “Many people bought gold at levels of about 3.5 thousand rubles. per gram, and it could just be profit-taking,” she says. “As for legal entities, many producers expected an increase in the price for the sale of gold mined in 2022,” agrees the chairman of the board of Realist Bank Vladimir Elmanin. “There was a long pause in sales in the second half of 2022 due to the fact that gold prices during this period were at or below the cost of production,” he explained.

At the same time, as VTB explained to Kommersant, banks bought relatively high volumes of gold on the Moscow Exchange, since at that time its cost was more favorable compared to the price on the over-the-counter market. Irina Lozinskaya notes that demand and supply from clients are important factors for banks, and demand for gold has been at a high level since the beginning of the year. Financial institutions hedge price risks when buying/selling gold, VTB stressed.

It is worth noting that the trend for the sale of gold by citizens was observed only on the stock exchange – individuals continued to buy the precious metal in bullion in April. According to the head of Sovcombank Wealth Management Ekaterina Seredinskaya, private clients practically do not sell gold bullion. “If the dollar continues to decline, customer purchases will increase,” she says. Yulia Bezmenova, Head of the Private Banking and Privilege Business Development Department at VTB, notes that at the end of the first quarter of 2023, the volume of physical gold sold in the bank reached 39.5 tons, an increase of 24% since the beginning of the year. In her opinion, clients continue to choose gold as a currency-exposed asset in the Russian infrastructure, well suited for portfolio diversification.

Experts clarify that exchange transactions with gold are more focused on short-term profits. Valery Piven, head of the financial institutions rating group at ACRA, says that the growth in the cost of gold in ruble terms has continued since the third quarter of 2022, its termination in April could have prompted individuals to close their positions and look for alternative instruments.

Daniil Bolotskikh, an analyst at the Tsifra Broker investment company, adds that due to the growing volatility and the bankruptcy of a number of banks in the United States, global demand for gold was near historical highs. In the first quarter of 2023, global central banks set a record by buying 228.4 tons of the precious metal, the expert explains, regulators have been very actively buying gold for the third quarter in a row.

Maxim Buylov