A Quick Preview of Yellow Metal (XAU/USD) after G7 Bans Russian Gold; June 28, 2022

A Quick Preview of Yellow Metal (XAU/USD) after G7 Bans Russian Gold

The latest sanction against Russia was imposed by G7 countries because of its ongoing invasion of Ukraine. During the recent G7 meeting, the United States, Britain, Japan, and Canada announced they would ban imports of new gold produced in Russia. This newly imposed sanction failed to bring extreme volatility into the gold prices as gold started a new week on a positive note but robust U.S. Economic indicators dragged the gold down below $1,830 mark.

U.S. President Joe Biden’s also commented that new gold ban would deprive Russia of tens of billions of dollars the pariah nation needs to fund its war in Ukraine. As we all know that Russia is the world’s second-largest gold producer, representing 9.5% of the global supply and Last year Russia’s gold exports were valued at more than $15 billion. This new sanction could have the biggest impact on London’s gold market because 28% of Russian gold was exported to London, as per the BNN Bloomberg research report.

There are two different theories prevail in the market. The first one suggests that the ban was not expected to significantly impact the global gold market as Russia’s gold production is primarily domestic but the ban would significantly impact Russia’s economy where the second theory suggests that the new sanction would only apply to G7 nations. The two largest gold-consuming countries: China and India, could continue to buy Russia’s precious metals as both nations have been sympathetic to Russia.

As most gold futures contracts are settled in U.S. dollars, the growing Russia – Ukraine geopolitical uncertainty and market volatility are creating strong demand for physical gold.

According to the Byron King, editor at Agora Financial, gold prices to continue to rise and recommends investors hold some physical in their portfolio as a safe-haven asset and inflation hedge.

Technical View:

XAU/USD (Gold):

  • Gold moves in rigid boundaries and remains well supported above $1,820 mark.
  • The pair made intraday high at $1,825 and Low at $1,822 mark.
  • A day chart and H1 chart with triple EMA suggest bearish trend for the time being.
  • A sustained close above $1,828 on H1 chart requires for the upside rally.
  • Alternatively, a consistent close below $1,821 on H1 chart will test further supports.

Take a look and do trade wisely!
Good Luck