Russia Sanctions Bill: How may it impact gold, silver, Indian stock market? Explained

According to Republican Senator Lindsey Graham, US President Donald Trump has backed the Russia sanctions bill, which could raise US tariffs to at least 500% on countries that buy Russian oil.

Graham on January 7 said that President Trump "greenlit the bipartisan Russia sanctions bill, which will allow him to punish those countries who buy cheap Russian oil, fueling Putin’s war machine."

"This bill would give President Trump tremendous leverage against countries like China, India and Brazil to incentivise them to stop buying the cheap Russian oil that provides the financing for Putin’s bloodbath against Ukraine. I look forward to a strong bipartisan vote, hopefully as early as next week," Graham stated.

What is the Sanctioning of Russia Act of 2025?

According to the official website of US Congress, the bill seeks to "impose penalties on certain persons (individuals and entities) if the President determines that the Russian government or a person acting at Russia's direction is involved with (1) refusing to negotiate a peace agreement with Ukraine; (2) violating a negotiated peace agreement; (3) initiating another invasion of Ukraine; or (4) overthrowing, dismantling, or seeking to subvert the Ukrainian government."

If the President makes such a determination, the bill requires certain actions, including visa- and property-blocking sanctions and an increase in tariffs to at least 500%.

How could the Russia sanctions bill impact the Indian stock market?

Trump has been accusing India of buying Russian oil. He has imposed a 50% tariff on Indian goods and threatened that tariffs could be even increased if India continues buying Russian oil.

If tariffs are further increased and expanded to even the services sector, it may be a serious blow to the Indian economy and stock market sentiment.

However, it is too early to conclude anything as the US Supreme Court is expected to issue rulings on tariffs on Friday.

"Let’s wait for more clarity. Tomorrow’s Supreme Court verdict on tariffs will be important. That could influence how these measures are finally implemented," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

Vijayakumar, however, emphasised that the 500% tariffs will be a major negative for the economy and the markets, as he pointed out that even with the existing tariffs of 50%, it will be difficult for the economy to sustain its current growth momentum. India has done reasonably well so far despite tariffs, but prolonged uncertainty is a concern.

"India currently has a trade surplus of around $41 billion with the US. If the tariff issue is not resolved, this surplus could widen further, putting pressure on the rupee, which was already the worst-performing currency in Asia last year. Further depreciation expectations can trigger additional foreign institutional investor (FII) selling. This creates a self-fulfilling vicious cycle—currency weakness leads to FII outflows, which in turn weakens the currency further," said Vijayakumar.

Do the prospects of increased tariffs pose a broader macroeconomic risk?

Yes, Vijayakumar said.

"The US President has shown that he is capable of taking unpredictable and disruptive decisions, so even a 500% tariff may be possible. Macroeconomic stability could come under pressure. If the US announces additional tariffs on India, it could be a serious blow to both the market and the economy," said Vijayakumar.

G Chokkalingam, founder and head of research at Equinomics Research Private Limited, also said the Russian sanctions bill is a major negative.

"It is clearly negative—there’s no doubt about that. A 500% tariff is significant. However, not all products are affected equally, and many exports are not directly competitive," said Chokkalingam.

Chokkalingam pointed out that so far, the impact has been manageable because India exports a large share of non-tariff products and benefits from free trade agreements (FTAs) and diversification into other categories.

Chokkalingam believes that at this point, it is not a serious crisis for India, and the situation can be managed as long as the impact remains limited to goods. However, if such measures start affecting the services sector, then it would become a major problem.

However, Pankaj Pandey, the head of research at ICICI Securities, sees these developments in a different context. He says India is not bound to buy Russian oil, and if he is offered cheaper Venezuelan oil, it will be a major positive.

"I believe that for Venezuelan oil to revive, they need new buyers. In that context, India may get an offer to buy cheap oil from Venezuela. In fact, I see a ray of hope for lowering tariffs. India is not bound to buy Russian oil," said Pandey.

The potential impact of the Russian sanctions bill on gold and silver

For gold and silver prices, geopolitical and economic uncertainties are key drivers. If tariffs are increased on India and China and if the tariff war escalates, precious metals may see fresh buying interests, which will drive them to unprecedented levels.

According to Jigar Trivedi, Senior Research Analyst at Reliance Securities, this surely will impact bullion and the undertone will remain bullish if the rupee continues to depreciate beyond 91 levels.

"The role of the RBI will be crucial as sufficient ammunition is there with them to intervene in the forex market, but time will only tell the trend in the rupee and gold," said Trivedi.

Anuj Gupta, A SEBI-registered analyst, said steep tariffs would undoubtedly increase global uncertainty, which is generally positive for bullion.

"These measures could be negative for the US economy as they may fuel inflation. The US imports a range of commodities and products from countries such as India, China, and Russia. Higher tariffs could push up costs, which would be inflationary. In the long run, this inflationary pressure would be supportive for gold and silver," Gupta said.

According to Gupta, $4,300-$4,400 is a strong support zone for gold. In the domestic market, ₹1,20,000– ₹1,30,000 represents a key support area. On the higher side, $4,500 is an important resistance, which translates to around ₹1,42,000 domestically. Further resistance is seen near $4,700, or roughly ₹1,50,000 in the domestic market.

Gupta expects some further correction in the short term. However, buying interest is likely to emerge near support levels, and those levels should offer good buying opportunities.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.