* Russia wants to sell up to 50 tonnes of gold by year-end
* Sale as much as 1.25 percent of annual world gold consumption
* Sale could raise as much as $1.7 billion at current prices
* Russian government says approval not signed yet (Adds quotes from traders, analysts)
By Polina Devitt
MOSCOW, Oct 23 (Reuters) - Russia plans to sell as much as 50 tonnes of gold this year to help plug a budget deficit in the first major bullion sale by its precious metals repository since the fall of the Soviet Union, a high level source told Reuters.
The sales from Russia's State Precious Metals and Gems Repository (Gokhran) could account for 0.5 to 1.25 percent of global consumption of the metal, which soared in price to a record of $1,070.40 per ounce on Oct.14.
"More than 20 tonnes, but less than 50 tonnes of gold will be supplied this year," the source familiar with the matter said on Friday, adding that the sale was intended to increase state budget revenues.
The source said the sale would be the first major gold sale by Gokhran since the 1991 fall of the Soviet Union, which kept a veil of secrecy over its sometimes significant foreign sales of gems and precious metals.
Two other sources in the Russian government confirmed the planned gold sale but declined to comment on the volumes involved. The sales will be carried out by state owned Almazjuvelirexport.
Government spokesman Dmitry Peskov said a government resolution allowing the sale had not yet been signed.
Gokhran, which traces its history to a decree by Tsar Peter the Great in 1719, holds the Russian state's stocks of precious metals such as gold and palladium and gems such as diamonds.
Spot gold rose to a high of $1,067.30 per ounce on Friday, up from $1,060 late in New York on Thursday.
At current prices, Russia could raise as much as $1.7 billion if Gokhran sells 50 tonnes of bullion.
That would help it cover its first budget deficit in a decade that is forecast to total nearly $100 billion this year, or about 7.5-7.7 percent of gross domestic product. Gokhran is subordinated to the finance ministry.
"There's a budget deficit they need to fund, so a sale of gold does seem the most sensible thing to do, but I would have thought the impact on the market would be relatively limited," said Robin Bhar, an analyst at Calyon.
GOLD SALES
But some traders said they were sceptical of the bullion sale plans as the Russian central bank had increased stocks of gold as part of its international reserves by 14 percent in the last nine months to 19 million ounces.
"Why would they accommodate the international market when their own central bank is trying to buy gold?" said Afshin Nabavi, head of trading at MKS Finance in Geneva.
"I don't think the central bank would allow it to go into the international market," said Nabavi.
Gold, viewed as safe haven in uncertain times, has soared in recent weeks as investors have sought protection against declines in the value of the U.S. dollar.
Russia was the world's fifth-largest gold producer last year, accounting for about 7 percent of global output.
Under a government order signed at the start of the year, Gokhran is allowed to sell precious metals worth 44.4 billion roubles ($1.53 billion) in 2009.
But the size of Gokhran's stocks is a state secret and disclosure is punishable by imprisonment, though traders say Gokhran's stocks are thought to be sizeable.
"They haven't passed a decree yet. It's got to be signed off, so its not a done and dusted deal," said Calyon's Bhar.
He said any price move would be a limited knee-jerk reaction on the downside "because we don't know what state stocks are, and if it's the first, or only tranche, of state sales." (Additional reporting by Veronica Brown in London and Gleb Bryansky and Aleksandras Budrys in Moscow; writing by Guy Faulconbridge; editing by Christopher Johnson)