Russia's VTB Capital cuts gold exports due to higher demand from Central bank

Russia's VTB Capital, one of the country's biggest gold traders, reduced gold exports in 2018 due to higher demand from Russia's Central Bank and lower demand in China, its commodities head, Atanas Djumaliev said. The Russian central bank, one of the world's largest holders of bullion, has increased purchases for its gold and foreign exchange reserves this year amid geopolitical risks.
Some market players consider gold as a safe-haven asset in times of high economic and geopolitical risk. "(Our) gold sales were lower in 2018 compared with the previous year. To a greater extent it was caused by the activities of Russia's Central bank, which was our most active client this year and which was significantly increasing its gold reserves," Djumaliev said in an interview with Reuters.
"It also coincided with lower demand for gold in China - (our) sales there totalled about 11 tonnes in 2018," he said. The central bank declined to comment. VTB Capital, the investment banking unit of Russia's No.2 lender VTB, had aimed to double its gold sales to China in 2018.
However, the company strengthened its Hong Kong commodities team this year and remains committed to developing business in China and India, Djumaliev said, adding that a build-up of gold exports next year was possible. Djumaliev did not disclose VTB Capital's 2018 gold exports or the amount of its sales to Russia's Central bank, but said that so far in 2018, VTB Capital had bought more than 80 tonnes of gold in the Russian domestic market, the world's third largest gold producer.
He added that VTB Capital supported cutting VAT on investments in gold, a move which Russian officials are considering, to increase trading liquidity. "New demand from the population and (the pension) funds can become comparable with the one from the central bank (if the VAT is cancelled)," Djumaliev said.
VTB Capital also trades platinum group metals (PGMs), base metals and grain to diversify VTB group's revenues away from banking. VTB Capital has built up its PGM operations in the domestic and global markets this year, and aims to build up its stake in the PGM market.
The development in the base metals market of Russia, China and Central Asia will be one of VTB Capital's priorities for 2019, Djumaliev said, adding that the company had increased its team of metals traders this year to four people, from one. The bank is interested in building up its presence in China's market for metals concentrates.