G-7 countries summit in Germany saw the US, UK, Canada, and Japan planning to ban the import of new gold from Russia on Sunday.
Supported by London’s influential role in the gold trade, the sanctions will have a global reach and prevent the spread of the commodity in the international market. This is expected to have a massive impact on Russian President Putin’s ability to raise fresh funds, according to a statement by the UK government.
Shipment with the UK and Russia has collapsed to nearly zero after western countries imposed sanctions on Russia for its invasion of Ukraine. The London Bullion Market Association, known for setting standards for the gold market, removed from its accredited list of gold refiners from Russia in March.
Brokerage Firm BullionVault Head of Research Adrian Ash said the new resolution would formalize what the gold industry has already done.
The new measures will only apply to gold and leave Russia for the first time. According to Bloomberg News, the US Treasury Department will issue a USA ban on Tuesday. Traders from the US have been banned from engaging in gold transactions with the Russian central bank, Russia’s National Wealth Fund, and Finance Ministry after President Biden signed an executive order on April 15.
The sanctions from the western countries to punish Russia have led to the closure of the European and the US to access gold from Russia, the second-largest bullion miner in the world. On the other hand, the G-7 countries’ sanctions would ensure a total severance of trading ties between the world’s top trading centers, New York, London, and Russia. The other G-7 countries are France, Germany, and Italy.
Russian precious metals always had an essential market in London. According to data from UN Comrade, in 2021, around $15 billion of Russian gold was imported, accounting for 28% of the UK’s total gold imports.
Major Players
In theory, refineries can still import gold from Russia directly, but many have sworn to not doing so. The Swiss refiner’s association which dominates the gold industry denied that it imported gold from Russia after trade data showed that Russian bullion entered Switzerland.
The gold ban is expected to hit the Russian oligarchs directly, according to a statement from the Prime minister of the UK, even as Russian elites rushed to buy gold to avoid the financial impact of the sanctions. The gold import ban is expected to be enforced shortly and will apply to refined or new mined gold.
The flow of other metals from Russia, such as Nickel, copper, and palladium, is expected to continue as the commodities industry struggles to manage the long-held relationship with a significant supplier of raw materials.
In the meantime, the Russian gold industry is looking for new export avenues and exploring sales options with the Middle East, and China is not a part of the G-7.
