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For SOFAZ, gold is used as a hedge against external shocks, inflation and broader market stress. A larger allocation can help protect capital and reduce exposure to volatility.
The State Oil Fund of Azerbaijan (SOFAZ) is the country’s sovereign wealth fund, created to manage revenues from oil and gas exports and support long-term economic stability.
It plays a key role in funding the state budget and strategic projects.
As of 1 January 2026, gold made up 38.2% of its investment portfolio, up from the previous year.
“Gold holdings are managed within the Fund’s approved investment framework, taking into account target allocations and allowable deviation bands”, SOFAZ said in an official response sent to Euronews.
While gold prices hit record highs last week, surpassing levels of $5,500 (€4,660), rates dropped abruptly following Trump’s announcement of Kevin Warsh as the next chair of the US Federal Reserve.
However, on Wednesday, gold prices staged a significant recovery, rebounding to $5,000 (€4,230) per ounce.
SOFAZ explains that “decisions related to the gold sub-portfolio are guided by the Fund’s investment policy and overall risk-return balance, rather than short-term price movements.”
According to SOFAZ, gold plays a stabilising role within its overall portfolio, and increasing gold holdings reduces sensitivity to adverse market developments, supporting a more balanced strategic asset allocation.
The Fund links the expansion of its gold reserves with the aim of safeguarding the country’s strategic financial reserves, and strengthening resilience in the global economy.
SOFAZ’s portfolio and asset classes
SOFAZ started adding gold into its asset mix in 2012, increasing the allocation gradually over time.
Last year, the Fund purchased 53.4 tonnes of gold, increasing its reserves to 200 tonnes.
Over the past five years, SOFAZ has generated USD 22.7 billion (€18.95 billion) in investment returns, including the impact of exchange-rate movements and gold price appreciation.
SOFAZ attributes the Fund successfully navigating market downturns, recovery phases and preserving stability to maintaining a resilient and diversified portfolio.
Growth has been driven mainly by the equity sub-portfolio, covering both public and private equities.
Following a diversification strategy launched in 2012, the equity portfolio grew more than fourfold, delivering a 305% return and almost USD 10 billion (€8.35 billion) in investment gains.
