According to the US, Russia exported 5% of the total amount of gold in the world in 2020, and 90% of that production went to G7 nations, mostly to Britain. At a G7 meeting on Sunday, world leaders decided to prohibit Russia from exporting gold to reduce Moscow’s war fund.
Before travelling to Madrid for discussions with NATO allies, US Vice President Joe Biden and his colleagues from the world’s most industrialized nations are meeting at Elmau Castle in the Bavarian Alps, Germany.
While coping with the war’s growing global repercussions, they are working to unite Ukraine against Russia’s invasion. As Biden reminded German Chancellor Olaf Scholz, who was serving as the summit’s host, “We have to stick together.”
Joe Biden stated that Russian President Vladimir Putin had hoped “that somehow NATO and the G7 would fracture.” But we haven’t and we won’t either. Olaf Scholz, the chancellor, praised the Western alliance, saying that “Putin never expected” it.
The declarations of commitment came as Russia began bombing central Kyiv for the first time in three weeks, an action that Biden dubbed “more of their brutality.” Dmytro Kuleba, the foreign minister of Ukraine, requested the G7 to adopt further sanctions on Moscow and additional heavy weapons for Ukraine to combat “Russia’s sick imperialism” in advance of the summit.
When he joins the conference on Monday via video connection, Ukrainian President Volodymyr Zelensky will make the same appeal. Russia’s invasion of Ukraine, now in its fifth month, has plunged the world into a succession of problems, from skyrocketing prices to an impending food catastrophe and energy shortages.
Along with concerns related to climate change, the G7 leaders are also dealing with the approaching danger of recession. The G7 agreed to prohibit the import of Russian gold to put further pressure on Moscow. According to the US, gold is Russia’s second-largest export and a substantial source of income for Putin and his friends.
The White House estimates that in 2020, Russia contributed around 5% of all global gold exports, with 90% of its output going to G7 nations, mostly Britain. Putin’s soldiers have been digging in their heels for a protracted fight as Western allies have battered the Russian economy with unprecedented sanctions.
Both French President Emmanuel Macron and British Prime Minister Boris Johnson declared that they now believed there was a chance to “reverse the tide” in Ukraine. Later this year, London will provide a further $525 million in loan guarantees to the World Bank.
According to a Downing Street spokesperson, Boris Johnson warned Macron that “any effort to resolve the issue now would only generate persistent instability” and run the danger of granting Putin “permission to exploit both sovereign countries and world markets in perpetuity.”
Macron asked producers to control oil prices to reduce Russia’s earnings from surging energy revenues and find new ways to pressure Putin. According to Macron’s office, Paris supports a US proposal for a maximum oil price but noted that “it would be far more forceful if it came from the producing countries.”
The G7 will aim to increase the cost and repercussions of the assault on Putin and the Russian economy, according to John Kirby, a spokesperson for the White House’s National Security Council. They will also work to reduce “as much as possible the effect of these increasing oil prices and the way (Putin has weaponized energy”) at the same time.
The G7’s first session will be centred on the economic consequences, as the post-pandemic recovery is now in danger of entering a recession. The G7 was also nervously examining China, which it considers a systemic rival. The G7 was scarred by its reliance on Russian energy, which has prevented key European nations, notably Germany and Italy, from going all out to punish Russia.
The G7 is “front and center” in the impact of China’s coercive economic practices, use of forced labor, and intellectual theft, Kirby said. “I believe you’re going to see China very much in the forefront as the G7 goes on,” he said.
The G7 will also seek to persuade other significant parties to support it as the gap between Western allies and Russia and China deepens. Scholz has extended invitations to the presidents of Argentina, India, Indonesia, Senegal, and South Africa to the Alpine summit to achieve this.
At a critical UN vote, only Argentina and Indonesia voted to censure Russia; the other three abstained. But everyone is directly affected by the impending food crisis brought on by the suspension of grain and wheat exports from Ukraine; India, for example, has put limitations on wheat exports.
India’s gold prices are rising right now as certain nations forbid imports from Russia.
After several G7 nations sought to limit the import of Russian gold, gold prices today inched up in Indian markets. On the MCX, silver futures rose 0.9 percent to $60927 per kg, while gold futures rose 0.4 percent to $50814 per 10 grams.Global spot gold prices rose 0.5 percent to $1,835.58 per ounce.
According to analysts, the G7’s import embargo on Russian gold appears to be giving bullion some short-term support. To put even more pressure on Moscow, four of the Group of Seven (G7) wealthy countries took action on Sunday to forbid the import of Russian gold.
Among other precious metals, spot silver increased 1.2 percent to $21.36 per ounce, platinum increased to $912.00, and palladium increased to $1,886.65.
“COMEX gold trades slightly higher around $1835/oz., with the US dollar weakening and worries over the Russian supply growing as several G7 nations prepare to impose import restrictions on new Russian gold.” Along with dismal statistics and pessimistic growth projections, growing growth fears are another factor supporting gold.
However, the upside is constrained by expectations of monetary tightening and some stability in the stock market. Also showing decreased investor buying, gold ETFs have suffered net outflows. Despite conflicting causes, gold prices may continue to be under pressure, according to Ravindra Rao, vice president and head of commodity research at Kotak Securities.
According to some observers, the G7 decision will primarily be symbolic because the embargo just formalizes existing penalties that have been in place for the most part.
Given that the sector has already made efforts to minimize Russian gold imports, the impact of a restriction on imports by the G-7 nations is probably going to be pretty minimal. According to Warren Patterson, head of commodities strategy at ING Groep NV, “it appears to be purely symbolic.”
Gold, Silver, and Technical Outlook
This week, we anticipate more volatility in both precious metals. Multiple rejections of gold from the $1,845 200-DMA level, as well as persistent trading below the 50-DMA, at about $1,856 at press time, also give gold sellers encouragement. Silver is now trading at critical levels, and if $20.78 holds as the weekly closing price, it may resume its upward trend towards $22 per troy ounce in the coming days.
Support and resistance levels for gold in rupees are 50,440–50,110 and 50,980–51,240, respectively. Rahul Kalantri, VP Commodities, Mehta Equities Ltd., stated that the support and resistance levels for silver are Rs. 59,280-58,710 and Rs. 60,480-60,910.
