Gold: Russia Breaks the Western Blockade and Accelerates Metal Sales to China via Hong Kong

While some official and private statistics indicate that Russia sold about 50 tons of its gold reserves so far this year, the market suspects that exports may have been double the estimated amount. According to William Sandlund and Haohsiang Ko in the Financial Times, shipments to Hong Kong were nearly 100 tons in the first seven months of the year, three times more than recorded during the same period in 2025.

Russian exports to Hong Kong have steadily increased since the United States and the United Kingdom imposed sanctions on Russian gold following Russia's invasion of Ukraine. This is affirmed by Debajit Saha from LSEG, who explains that since London closed its doors to Russian gold after the outbreak of the conflict in Ukraine, Russian producers have increasingly redirected their exports to Eastern markets.

FT analysts maintain that most of the Russian gold bullion arriving in Hong Kong ends up in China or remains stored in the territory, due to Chinese import quotas limiting direct purchases. They highlight that this increase coincides with Hong Kong's effort to become a major international bullion center, including the launch in July of a pilot gold settlement system.

Vita Spivak from the UK-based geopolitical consultancy Gatehouse points out that Hong Kong's role in facilitating these flows reflects the broader economic relationship between Russia and China. They suspect that, within this relationship, Moscow provides resources to Beijing in exchange for economic support. Thus, Russia, which is the second-largest gold producer in the world after China, is increasingly dependent on raw material exports, particularly to the Asian giant, to bolster its war economy.

Of course, this growing trade also carries sanction risks. Western banks and refineries could be inadvertently exposed if Russian gold is mixed with gold from unrestricted sources. "If the transaction chain involves a sanctioned producer, there would be a risk of indirectly dealing with that sanctioned producer," said sanctions expert Tan Albayrak.

Hong Kong authorities indicated that participants in the new settlement system will continue to be subject to applicable anti-money laundering and counter-terrorism financing requirements. The change in Hong Kong comes at a time when Asian centers are competing to control a larger share of the global gold trade, which has traditionally been concentrated in London, New York, and Dubai.

FT reports that, according to Hong Kong trade data, nearly 100 tons of gold from Russia were imported between January and July of this year, a record figure. In this regard, it states that Russian gold exports to Hong Kong have been increasing since 2022, when Moscow invaded Ukraine and Washington and London imposed sanctions on Russian gold. It is noteworthy that both Hong Kong and China do not have such restrictions. It is estimated that since 2022, entities in Hong Kong have purchased over $35 billion in Russian gold bullion.

However, at the same time, a growing number of global central banks are beginning to repatriate gold stored in London and New York, including France and the Netherlands. Additionally, the conflict in the Middle East is further reinforcing Hong Kong's role as a settlement center for gold from Russia, partly due to logistical disruptions in Dubai.

FT recalls that in 2024, the U.S. Treasury Department imposed sanctions on several entities in Hong Kong for their role in a gold laundering network involving Russia. Along with Singapore, Hong Kong has positioned itself as a gold trading center and has also been working to attract central banks to store their gold in the city's vaults.

Hong Kong's role in facilitating gold trade between China and Russia is part of ongoing efforts to enhance Hong Kong's status as a regional financial center with Chinese characteristics, stated Jeremy Mark from the Atlantic Council, who added that Hong Kong has been a center for gold trading for generations and that infrastructure can be utilized for China's benefit.

It is worth noting that there is a huge demand for gold in China, both from retail investors and the central bank, which has substantially increased its bullion reserves.