Azerbaijan's Sofaz Executes First Gold Drawdown Since 2012

Azerbaijan's sovereign wealth fund, the State Oil Fund (Sofaz), has offloaded roughly 22 tons of gold during the first quarter of the year. This move represents the first time the fund has reduced its gold holdings since it began its accumulation strategy in 2012. The decision to sell was driven by a record-breaking rally in gold prices, which pushed the fund's allocation of the metal beyond its internal maximum threshold. By selling into the strength of the market, Sofaz is effectively rebalancing its portfolio to manage risk and adhere to its investment mandates. The total value of the gold sold is estimated to be more than $3 billion based on current market prices. Sofaz has historically been one of the most aggressive state-owned buyers of gold, contributing to the broader trend of central bank accumulation that has supported gold's recent price peaks. While the sale is significant for Azerbaijan's fiscal management, it highlights a potential turning point where sovereign buyers may begin profit-taking as prices reach historic highs. This shift in behavior from a primary buyer to a seller could introduce headwinds for gold's upward momentum if other sovereign funds follow a similar rebalancing strategy.