G7 powers will ban the import of Russian gold, US President Joe Biden said on Twitter on Sunday.
The move, set to be officially announced at the G7 three-day summit taking place in the Bavarian Alps, will impose "unprecedented costs on Putin to deny him the revenue he needs to fund his war against Ukraine," Biden wrote.
The US leader described it as a "major export that rakes in tens of billions of dollars for Russia."
"The measures we have announced today will directly hit Russianoligarchs and strike at the heart of Putin's war machine," British Prime Minister Boris Johnson said as he arrived at the summit, according to Britain's PA news agency.
Non-G7 democracies Argentina, India, Indonesia, Senegal and South Africa have been invited to participate in select sessions at Schloss Elmau, while Ukrainian President Volodymyr Zelensky will address delegates via video link.
A security exclusion zone around the venue - where Germany also held its last G7 in 2015 - has sealed the area off to anyone without a permit for the past week.
Some 18,000 security personnel are on hand to police the summit and keep order during the numerous planned demonstrations.
Speaking in the parliament in Berlin ahead of the G7, Scholz called for a "Marshall Plan" to fund Ukraine's post-war reconstruction, referring to the massive US investment in Germany and other Western countries after World War II. This would be discussed with Zelensky at the summit, Scholz said.
China's role in backing Russia since its invasion of Ukraine will also be the subject of discussion.
At a meeting of the BRICS nations on Thursday - also including Brazil, India and South Africa - Chinese and Russian leaders criticized Western countries and the sanctions imposed on Russia.
All G7 leaders except Japanese Prime Minister Fumio Kishida will travel to Madrid after the G7 summit to attend a meeting of NATO leaders that will be instrumental in firming up defence policies in the wake of the invasion.
