Russia’s war economy is being pulled in two directions. On one side, the country’s traditional cash engine — oil and gas — is under growing pressure from sanctions, discounts and softer global prices. On the other, a sharp rise in gold prices over the past year has offered Moscow an alternative source of liquidity, with growing evidence that bullion is being used to sustain procurement channels that sanctions were meant to choke off.
The argument has been framed most explicitly this week by Ambrose Evans-Pritchard in The Telegraph. In an article published on 3 February 2026, he contends that a “gold bubble” has acted as an economic escape route for President Vladimir Putin, allowing Russia to keep paying for critical imports and to cushion fiscal stress as energy revenues fall.
The immediate context is volatility in the precious metals market. Gold reached record territory in late January before a rapid correction. Reuters reported on 2 February that major banks have still been lifting their forecasts for 2026, even as prices swung sharply after hitting new highs. The Guardian described a steep sell-off at the start of February, linking the move to shifting expectations around US monetary policy and investor demand for safe-haven assets. Barron’s reported that gold had fallen about 18 per cent from its peak in just days, amid market reassessment after Donald Trump’s announcement of a Federal Reserve chair nominee.
For Moscow, the price path matters because the state is increasingly reliant on financial reserves rather than fresh energy income. The Russian Finance Ministry is currently selling yuan and gold from the National Wealth Fund at a pace equivalent to roughly $165 million per day, one of the fastest drawdowns on record, according to reporting cited by The Moscow Times. The same reporting says the fund’s liquid buffers have declined markedly over recent years, reflecting the cost of war spending and weaker hydrocarbons receipts.
Hydrocarbons still dominate the structure of Russia’s public finances, and recent figures underline the strain. Reuters reported on 4 February that Russia’s oil and gas revenues in January 2026 fell by roughly half year-on-year to their lowest level since July 2020, driven by lower crude prices and a stronger rouble. The same Reuters reporting noted that 2025 oil-and-gas revenues totalled 8.48 trillion roubles — a 24 per cent fall — and the weakest annual outcome since 2020.
Sanctions are central to that decline. US measures targeting major producers have tightened the operating environment for Russian exports, and the sanctions net has been widened to include Rosneft and Lukoil, with knock-on effects across supply chains and financing. The impact is amplified by the discount at which Russian crude trades versus benchmark grades, and by the higher logistical and compliance costs imposed on buyers and shippers.
Demand-side risk has also increased. United States will reduce tariffs on Indian imports after New Delhi committed to end purchases of Russian oil, though refiners are seeking guidance on timing and implementation. Russia’s budget outlook has become more sensitive as a result. On 4 February, Reuters cited modelling suggesting the 2026 deficit could widen well beyond official assumptions if energy revenues undershoot and spending pressures persist.
Against that backdrop, gold has assumed greater importance — not only as a reserve asset, but as a trade instrument. Recent reporting has pointed to a sharp rise in Russian bullion shipments to China. Yahoo Finance, citing figures reported in late January, said Russia exported 25.3 tonnes of gold to China in 2025, around nine times the 2024 level. If accurate, the trend supports the broader view that Russia is using physical commodities to manage hard-currency constraints and to settle accounts with partners willing to transact despite Western restrictions.
This is where the competing trends meet. Falling oil-and-gas income reduces the steady inflow that funded the Russian state for two decades. Rising gold prices, by contrast, increase the value of what remains in reserve and raise the proceeds from any sales or collateralisation. But bullion is not an unlimited substitute: selling reserves is inherently finite, and heavy reliance on gold exposes Moscow to sharp price corrections such as those seen between late January and early February.
The near-term question, therefore, is not whether Russia is under economic pressure — it is — but whether that pressure becomes binding for the war effort sooner than Moscow can adapt. The answer will depend on three variables: the durability of the hydrocarbons downturn; the trajectory of gold after its recent correction; and China’s willingness to keep absorbing Russian commodities and sustaining trade channels while managing its own exposure to US and EU policy.
