Central bank demand remains one of the primary pillars supporting the global gold market. However, recent months have witnessed an increase in price volatility, prompting some institutions to liquidate part of their reserves or restructure their positions.
In this context, the State Oil Fund of the Republic of Azerbaijan (SOFAZ) emerged as one of the most prominent sellers during the beginning of the year, after reducing its gold holdings by approximately 21.9 tons during the first quarter. Consequently, the weighting of gold within its portfolio dropped to 35.6%, compared to 38.2% in the final quarter of 2025.
As a result, the fund's total reserves decreased to 178.1 tons, down from approximately 200 tons previously. Despite this, the fund recorded significant year-on-year growth, as holdings stood at 165.3 tons a year ago, representing 25.8% of total assets.
This move comes as part of the fund's commitment to its investment policies, which cap gold exposure at 35% of the portfolio, with a maximum deviation margin of 4%.
Financial Performance:
Asset Decline: Quarterly data showed a decrease in the fund's assets by approximately $25.5 million.
Gold Performance: Gold remained among the best-performing assets during this period.
In its report, the fund noted that global financial markets faced a complex environment during the first quarter of 2026 due to escalating geopolitical tensions and persistent uncertainty. While these factors negatively impacted equity and bond markets, gold helped bolster the overall performance of the portfolio.
The report emphasized that the precious metal has continued its positive performance since the start of the year, supported by the structural factors that have underpinned prices in recent years. It further explained that despite a dip in March, gold ended the quarter with positive results, achieving notable returns for the fund's gold portfolio.
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