How ban on Gold from Russia will Impact Indian Markets?

Gold prices rose on Monday as news that some Western nations plan to officially ban imports of the metal from Russia for its invasion of Ukraine sparked some interest in bullion. The ban on Russian gold exports from four G7 powers (UK, US, Japan and Canada) will have an impact on the global commodity market.

Gold ban Impact Indian Markets

Gold is an essential export for Russia. In 2021, the year before the war with Ukraine, India exported $15.5bn (£2.6bn) worth of gold. Russia’s annual gold production is 350 to 380 tons. With the ban, so much gold value will be shut out of the formal international market. In early March 2022, the London Bullion Market suspended 6 Russian refiners from its accredited list.

Russia has already faced severe sanctions. Russia’s wealthy oligarchs wanted to convert their assets into gold. Although flows to/from Russia have already been restricted by sanctions, this ban is considered a “token”, at least in developed economies, and a ban simply formalizes what has been largely established through sanctions.

National President, Commodity Participant Association of India (CPAI) Narinder Wadhwa said “the G-7 compromise would mark a complete break between Russia and the world’s two main trading centers, London and New York. In essence, newly mined gold will not be available to the rest of the world through trading centers like the UK and Switzerland. Russian bars can find a way through smuggling. The formal ban creates a supply shortfall, so it would keep the premium higher in the markets”.

Global inflation due to supply chain disruptions due to the Russian-Ukrainian war is also taking a toll on India’s foreign exchange reserves. Crude oil had peaked at $122 a barrel, palm oil had recently become more expensive due to Indonesia banning its imports (prices are now down after the ban was lifted and import tax cuts), and the prices of raw materials also reached their high levels. . All this together was putting pressure on India’s foreign exchange reserves as more dollars were required for more expensive imports, added Narinder Wadhwa.

In such scenarios and In times of economic uncertainty, like the one we are experiencing, investors tend to lose their appetite for risk. One of the favourite refuge positions is often investing in precious metals. Gold is an investment instrument that has a low correlation to the general market, making it an attractive instrument during periods of poor economic management or financial crisis, a significant feature of emerging markets. Gold is a very noble instrument and represents a good hedging strategy for emerging countries with high volatility, said Narinder Wadhwa

Silver goes up

Spot silver rose 1.3 percent to $21.38 an ounce, while platinum gained 0.7 percent to $913.51.

Palladium rose 2.6 percent to $1,925.31.

corn, soybean drop

Chicago corn fell on Monday weighed down by the prospect of better weather in some producing regions.

Wheat rose while soybeans fell slightly.

The most active corn contract on the Chicago Board of Trade fell 1.53 per cent to $7.38-3/4 a bushel. Chicago wheat rose 0.19 per cent to $9.38 1/4 a bushel, while soybeans lost 0.26 per cent to $14.2 1/2 a bushel.

The U.S. Midwest corn crop was most likely to receive some much-needed rains early in its yield-determining pollination development phase, according to the latest weather forecasts.

Copper gains

Copper prices in London rose on Monday as the easing of COVID-19 restrictions in top metals consumer China raised hopes of a revival in demand, though fears of a global economic slowdown due to rapid rises in interest rates capped gains.

Three-month copper on the London Metal Exchange was up 0.5 per cent at $8,420 a tonne by 0441 GMT, after falling to its lowest level since February 2021 at $8,122.50 in the previous session.

Shanghai’s top-traded August copper contract fell 0.6 per cent to $9,579.37 a tonne by midday.

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