What is the G7 Ban on Russian Gold?
Recently, President Joe Biden announced that the United States and other G7 countries will ban imports of gold from Russia. This can mean a lot for gold investors, and it is important to keep up-to-date on the latest news. Keep reading to learn more about the G7 ban on Russian gold and what it means for gold prices.
What Is The G7?
The G7 (Group of Seven) is an organization of the world’s seven largest so-called “advanced” economies, which dominate global trade and the international financial system. They are Canada, France, Germany, Italy, Japan, the UK, and the United States.
- Russia joined in 1998, creating the G8, but was excluded in 2014 for its takeover of Crimea.
- China has never been a member, despite its large economy and having the world’s biggest population. Its relatively low level of wealth per person means it’s not seen as an advanced economy in the way the G7 members are.
- Throughout the year G7 ministers and officials hold meetings, form agreements, and publish joint statements on global events.
- Germany took over the G7 presidency in January 2022, which means it will host the organization’s annual summit in June.
- The EU is not a member of the G7 but attends the annual summit.
Why Is The G7 Banning Russian Gold?
According to CNN, US President Joe Biden announced Sunday that the United States will ban Russian gold, the country’s second most valuable export after energy. Gold exports were worth £12.6 billion ($15.5 billion) to the Russian economy in 2021, according to the UK government. Biden and fellow G7 leaders are currently meeting in Germany to discuss new ways of punishing the government of President Vladimir Putin over the invasion of Ukraine while trying to limit the fallout on a stressed global economy.
The CNN article continues; “The United States has imposed unprecedented costs on Putin to deny him the revenue he needs to fund his war against Ukraine,” Biden said in a tweet on Sunday. “Together, the G7 will announce that we will ban the import of Russian gold, a major export that rakes in tens of billions of dollars for Russia,” he added.
British Prime Minister Boris Johnson said Sunday that the ban will hit Putin hard. “The measures we have announced today will directly hit Russian oligarchs and strike at the heart of Putin’s war machine,” Johnson was quoted as saying in a statement issued by Downing Street on Sunday.
What Will Happen to Gold Prices?
Here is what is happening to the price of gold due to the G7 ban:
- Gold prices firmed as some Western nations’ plans to ban imports of the metal from Russia for its invasion of Ukraine, signaled potentially tighter supplies of bullion.
- Spot gold was up 0.2% at $1,828.99 per ounce by 0102 GMT. U.S. gold futures were flat at $1,830.90.
- Four of the Group of Seven (G7) rich nations moved to ban imports of Russian gold on Sunday to tighten the sanctions squeeze on Moscow and cut off its means of financing the invasion of Ukraine.
- But it was not clear whether there was G7 consensus on the plan, with European Council President Charles Michel saying the issue would need to be handled carefully and discussed further.
- Gold is seen as a hedge against inflation, but higher interest rates raise the opportunity cost of holding bullion, which yields no interest.
- The International Monetary Fund slashed its U.S. economic growth forecast on Friday, as aggressive Federal
- Reserve interest rate hikes cool demand but predicted that the United States would “narrowly” avoid a recession.
- Gold prices fell last week as looming interest rate hikes weighed, despite seeing some gains on Friday as the dollar retreated and recession fears buoyed its safe-haven appeal.
- SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.2% to 1,061.04 tonnes on Friday from 1,063.07 tonnes a day earlier.
- Spot silver rose 0.2% to $21.15 per ounce, platinum gained 0.2% to $908.99, and palladium was up 0.2% to $1,880.69.
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