Moscow/IBNS: As Western sanctions continue to tighten around Russia, Moscow on Friday (Sept 6) announced that the country will increase its daily gold purchases to 8.2 billion rubles, which represents a 601 percent rise from previous occasions, to bypass financial restrictions and maintain trade with its partners.
Moscows recent strategy of buying precious metals like gold in substantial quantities aligns with the countrys broader economic move towards de-dollarization, aimed at consequently bringing down reliance on the US dollar, which has long dominated international trade and finance.
Furthermore, Russia, by increasing its gold reserves, seeks to insulate its economy from Western financial sanctions.
According to a report by Mugglehead Magazine, this would have the double effect of mitigating the volatility of currency markets.
Russias approach is also closely linked to the countrys leadership role in BRICS, an intergovernmental economic organization comprising Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates (UAE), and its push for a new financial system that could challenge the dominance of the US dollar.
Gold plays a crucial role in this strategy, as it could bolster the credibility of currencies with significant gold reserves, according to analysts.
Mugglehead Magazine reported that there were signs that Moscow may begin trading oil for gold, marking a notable departure from the petrodollar system, and this shift could undermine the US dollars global reserve status by offering an alternative for oil trade, which has traditionally been conducted in dollars.
Moscows focus on gold is part of the countrys response to Western sanctions following its conflict with Ukraine.
These sanctions slapped by the Western economic majors have driven Russia to pursue greater self-sufficiency and alternative economic strategies, which includes gold providing a hedge against the restrictions imposed by systems like Society for Worldwide Interbank Financial Telecommunications (SWIFT), the global financial artery that allows the smooth and rapid transfer of money across borders.
