Russia’s economy is facing fresh turmoil as the country burns through its gold reserves amid record-high interest rates.

Business outlet RBC said, citing data from Russia’s Central Bank, that metal reserves tanked to the lowest level since 2022 at the end of last year.

RBC said reserves shot down by 46.4% in 2024, equivalent to over 33 metric tonnes. It explained: “Physical gold reserves in Russian banks at the end of 2024 fell sharply … This is due to the Bank of Russia’s high key rate.”

According to the outlet, the country now has 38.1 metric tonnes of physical gold reserves worth 325 billion rubles (£2.7 billion).

However, the Central Bank painted an even grimmer picture, saying physical gold dropped to the lowest level since the pandemic in 2020. In monetary terms, gold reserves saw a 23.6% decline in 2024, it added.

This has been linked to record-high interest rates, as high as 21%, aimed at countering inflation at 9.5% due to high military spending and a labour shortage.

Despite this, gold prices soared to record highs 40 times last year. The World Gold Council said Russians bought 75.6 metric tonnes of the metal last year – an increase of 6% from 2023 and 62% from 2021, before the war in Ukraine.

This comes from increasing economic sanctions on Russia, a tanking ruble, and restrictions on international payments, making gold more attractive.

Vladimir Putin has tried to circumvent these sanctions, using his prized shadow fleet to transport vital oil reserves.

These ships have avoided sanctions by changing ownership through shell companies in the Middle East, causing the number of shadow fleet vessels to rise from 13% to 42% between 2022 and 2023.

Oil has been a lifeline for the Russian economy during the nearly three-year-long war. Still, economic sanctions from the West and Ukrainian drone strikes on refineries have put it in jeopardy.

Former senior British military intelligence officer Philip Ingram said Russia’s oil revenue is the “one thing” that’s keeping it in the fight against Ukraine.

He said Russia’s economy could “collapse completely” in 2025 as its vital oil supplies and exports are hit with sanctions and drone strikes.