Turkey has overtaken Russia as the world's biggest gold buyer, Japanese media said, amid fears that relations with the United States may cool and the country may not be able to settle accounts in dollars.

Central Banks around the world have been increasing their reserves of the precious metal over the past decade to diversify their portfolios. Once a major contributor to this trend, Russia is now the world's fifth-largest holder of gold, with nearly 2,300 tons, according to the latest data from the World Gold Council.

But Russia bought only about 28 tonnes of gold between January and May, down about 60 per cent from the same period last year. In late March, the central bank said it would stop domestic gold purchases starting April 1, without explaining why.

"Externally, it is likely that the fall in crude oil prices has affected Russia's gold buying stance," said Takuhiro Morita of financial research firm Morita Tongren. If Russia earns less from its oil exports, it has less money to spend on gold.

Turkey has become the world's largest buyer of gold for reserves, the report said. Between January and May, the country bought about 148 tonnes of gold, about three times as much as in the same period last year.

Reports say Turkey, like Russia, has seen its foreign exchange earnings decline recently. Tourism spending, a key driver of the economy, has fallen as a result of the COVID-19 outbreak, while the lira recently fell to its lowest level on record.

"Turkey is buying as much gold as it can," says Yoshida Hirayama of SMBC Nikko Securities. "There is no economic reason why." It would be easier to avoid further devaluation if the country simply stuck with its reserves.

Reports suggest that Turkey is buying gold anyway, presumably because relations with the United States have deteriorated in recent years. If relations deteriorate further and America tightens sanctions, Turkey may not be able to get dollars to settle payments.