Biden and his fellow G7 leaders are currently meeting in Germany to discuss new ways to punish President Vladimir Putin’s government for invading Ukraine, while trying to limit the fallout on a struggling global economy.
British Prime Minister Boris Johnson said on Sunday the ban would hit Putin hard.
“The measures we announced today will hit the Russian oligarchs directly and strike at the heart of Putin’s war machine,” Johnson said in a statement released by Downing Street on Sunday.
London trade was already suspended
The sanctions will have a “tremendous impact on Putin’s ability to raise funds”, the press release adds.
The import ban will apply to newly mined or refined gold, Downing Street said. But this has no impact on gold mined in Russia and previously exported from the country.
Gold exports from Russia had already been shunned by some key market players since the invasion of Ukraine on February 24.
The London Bullion Market Association (LBMA), which regulates the world’s largest and oldest market for trading physical gold and silver, suspended trading at Russia’s six gold mines and refineries on 7 march.
The G7 is expected to officially announce the ban on Tuesday. Canada and Japan are already on board, according to the British press release. Meanwhile, some European countries want further discussion on the potential impact.
Opportunity for India?
The price of gold rose 0.5% to $1,836.03 on Monday. However, analysts said the ban would not have a significant long-term impact. gold price outlook.
“Gold posted a very modest gain following the announcement, but that will not structurally change the directional outlook for gold,” said Jeffrey Halley, senior market strategist for Oanda, on Monday.
“In reality, this is a simple exercise in endorsing the unofficial policies already in place,” he added.
“We believe the impact will be quite limited for international markets as flows have already been restricted by previous sanctions,” said Sriram Iyer, senior research analyst at Reliance Securities, referring to the March action of the LBMA.
India is the world’s second largest buyer of gold after China, and analysts say economic conditions will have a bigger impact on their spending habits.
“The ban could create a supply shortage due to the unavailability of Russian gold,” Iyer said.
But that wouldn’t be a major driver of the markets, he said.
“We believe the current macro conditions of higher interest rates and global recession expectations will have a bigger impact on market sentiment,” Iyer added.
Megh Mody, commodity and currency research analyst at Prabhudas Lilladher, a Mumbai-based brokerage firm, said there could even be “an opportunity” for India to get gold from Russia at a cheaper rate.
“It will be an opportunity to see if, like crude, gold can be available in ruble,” he said. “If this happens, India can receive gold at a reduced rate.”
The South Asian country has grabbed Russian oil at gold prices since the start of the war.
— Allie Malloy and Manveena Suri contributed to this report.
