Russia's gold buying surge over the past year is simply down to a wish to diversify its portfolio of reserves, the central bank governor told CNBC Friday.
The country overtook China last year to become the world's fifth largest official sector holder of gold. The central bank bought 8.8 million troy ounces of bullion last year, beating a record 7.2 million ounces set in 2017, and fresh data continues to show that the buying hasn't stopped.
Experts have speculated that Western sanctions could have caused the move, with the safe-haven asset being exempt from any possibility of blacklisting. Others suggest Russia wants to reduce its reliance on the U.S. dollar, or is shying away from the euro or the pound, which have seen their values fall due to policy easing and Brexit, respectively.
But Elvira Nabiullina, the governor of Russia's central bank, told CNBC's Geoff Cutmore in Moscow Friday that "diversification" was the key reason behind the purchases, and not a lack of trust for any specific currency.
"You see we try to diversify our international reserves composition. Because we estimate all the possible risks, economic and geopolitical risks," she said.
"We try to understand the long-term dynamics of different types of currencies and the needs of our economy for using this currency and the process of taking this decision about the structure of these reserves," she added.
Seen as a traditional hedge against inflation, gold was trading at $1,284 per troy ounce on Friday. It's still down considerably against a peak in the early half of the decade when it rose above $1,800.
Quantitative easing by central banks — which essentially floods economies with cheap cash — stoked fears that inflation would rise, causing a price rally in the commodity. But by 2013 that rally had fizzled out with the worst of the economic downturn over and the Federal Reserve indicating that it would soon dial back on stimulus.