"Small episode" under the global central bank trend of buying gold: How to interpret the Philippines and Russia's gold throwing signals?

1. How does the sale of gold by the Philippine central bank impact? According to reports, on October 27, Benjamin Diokno, an official from the Philippine central bank, publicly stated that due to concerns about the future weakness in gold prices, they plan to reduce their "excess" gold reserves, and pointed out that the ideal proportion of gold in foreign exchange reserves should be maintained between 8% and 12%. Against the backdrop of central banks around the world increasing their gold holdings, the market was concerned that the Philippine central bank's statement could trigger a demonstration effect, leading to a 2.75% drop in international gold prices that day. However, we believe there is no need to overly worry about the "individual behavior" of the Philippine central bank for the following reasons: 1. Limited potential scale of sales, actual impact can be controlled As of October 2025, the value of gold reserves held by the Philippine central bank was $16.89 billion. Estimated at an average gold price of $4057 per ounce in October, their total reserves amount to approximately 4.16 million ounces. At the same time, the total foreign exchange reserves of the Philippines were $109.71 billion, with gold accounting for 15.4%. To reduce this ratio to 8%-12%, it is estimated that they would need to sell about 200,000 ounces (about 62 tons) of gold at most, which is only about 6% of the global central bank's annual net gold purchases. Furthermore, it is expected that this type of selling will not be done in a concentrated manner in the short term. On the one hand, rapid selling could trigger a significant drop in gold prices, which would be contrary to their "foreign exchange management" goals; on the other hand, based on their historical operations, the Philippine central bank usually sells only a few tons of gold per month, at a more steady pace. 2. Selling behavior falls under the category of foreign exchange management, not a strategic shift The Philippine central bank sees gold buying and selling as part of their "foreign exchange investment portfolio," rather than as an untouchable strategic reserve like some Asian countries. For example, during a period from January to August 2024 when the price of gold rose by over 20%, they sold over 30 tons of gold. However, after the subsequent rebound in gold prices, this operation was also criticized by the domestic public. Therefore, this statement should be seen more as a tactical adjustment of their assets, rather than a fundamental questioning of the value of gold. Source: World Gold Council, Zijin Tianfeng Futures Research Institute 2. Gold is Russia's "internal cash machine" According to Russian media reports on November 20, the Russian central bank announced on Wednesday that it would begin selling physical gold from the national reserves as part of budget financing. To better understand this move, we have examined Russia's recent financial situation. As of October 2025, Russia's fiscal deficit has reached 4.2 trillion rubles, far exceeding the budget target of 1.2 trillion rubles set at the beginning of the year. After two revisions in June and autumn, the full-year budget deficit has been revised to 5.7 trillion rubles, marking the worst fiscal performance in nearly 20 years. Russia's significant expansion of fiscal deficit in 2025 is mainly due to two factors: on one hand, fiscal revenues heavily reliant on energy exports have shrunk significantly due to a sharp decline in oil and gas revenues; on the other hand, fiscal expenditures have shown significant growth. In this context, selling gold reserves has become a realistic choice to alleviate budget pressure. However, these gold transactions are completely domestic: the gold bars do not leave the country, ownership only changes hands between the central bank and local banks, market makers, with rubles being directly used to bolster the finances, bypassing sanctions and without causing international selling pressure. Gold has thus become Russia's "internal cash machine," but it is difficult to create ripples in the international market. Source: Bloomberg, Zijin Tianfeng Futures Research Institute. 3. Individual central bank tactical adjustments do not change the global trend of increasing gold allocation According to data from the International Monetary Fund (IMF), the share of gold in global central bank reserve assets (foreign exchange + gold) had risen to 25% in 2025, continuously increasing for four years, while the share of the US dollar had decreased from 43% to 40%. Although the news of the willingness of central banks in the Philippines and Russia to sell gold has brought short-term emotional disturbance to the market, this has not changed the long-term trend of systematic increase in gold allocation by central banks globally. The World Gold Council's annual survey report further confirms this direction: 73% of the surveyed central banks expect the share of US dollar reserves to remain stable or decrease further in the next five years, while 95% of central banks expect global official gold reserves to continue to grow in the next 12 months. Individual central bank tactical adjustments are not enough to reverse the structural trend of the global reserve system towards diversification and decentralization. Source: Bloomberg, Zijin Tianfeng Futures Research Institute This article is from the official WeChat account of Zijin Tianfeng Futures Research Institute, written by Liu Shiyao, edited by GMTEight: Chen Qiuda.