As the most recent move in their efforts to penalize Moscow for his invasion of Ukraine, world powers, led by the US, have prohibited gold shipments from Russia. The G-7’s decision, made only days before a significant NATO summit, was portrayed as a show of resolve because the five-month-old conflict itself and the existing sanctions against Russia have already had a devastating impact on the world economy. This is due to the fact that gold continues to be the go-to backup commodity in uncertain economic times, and Russia is the third-largest producer of gold and one of the top exporters of both raw and processed gold products. Sanctioning Russian gold is likely to increase volatility and lead to a worldwide gold price bubble. But it will also undoubtedly make things worse for Russia. The sanctions may still have some gaps in them. The G-7 nations get nearly 90% of Russian gold exports, making this fact particularly noteworthy. If other nations do not follow the lead of the superpowers, there are still hundreds of potential buyers, and there are even more on the illicit market. As the conflict in Ukraine drags on, Putin has also largely ignored the effects of the sanctions on his people and appears to be solely focused on winning the conflict there. The G7’s primary priority continues to be the war’s economic effects, particularly how they will affect the cost of oil and other forms of energy. Some middle-income nations that are friendly toward Russia have gained new significance as a result, particularly India and South Africa, both of which were invited to the G7 summit after choosing to abstain from the UN resolution condemning the Russian invasion of Ukraine. It’s interesting to note that both are also among the nation’s most severely impacted by the war’s effects on food prices and supplies, with India going as far as banning wheat exports to help control domestic prices.
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