Indian Prime Minister Narendra Modi has called on citizens to refrain from buying gold for a year, aiming to reduce spending and conserve foreign exchange as India faces macroeconomic challenges stemming from the ongoing Iran war [1]. Modi stated, "For a year, be it any function, we shouldn’t buy Gold jewelry," and also announced other cost-cutting measures such as fuel conservation, increased working from home, and limiting overseas trips [1].
India is the world's largest consumer of gold alongside China, making Modi's appeal particularly significant. Despite the announcement, gold prices have not moved significantly, as it remains uncertain whether Indians will heed the recommendation. However, shares of Indian jewelers experienced a sharp decline following the news [1]. According to the World Gold Council, Indian gold demand reached 151 tonnes in the first quarter of 2026, a 10% year-on-year increase driven by a 54% surge in investment. Conversely, jewelry demand dropped 19% due to record-high prices, though overall spending surged to a record high, highlighting resilient consumer demand [1].
The prolonged conflict in the Middle East has led to surging oil prices, exacerbating India's economic pressures. India imports nearly 90% of its crude oil, and the spike in prices is expected to worsen the country's balance of trade. Additionally, the Indian Rupee has hit a record low against the US Dollar, making imports even more expensive [1].
Analyst Jateen Trivedi of LKP Securities commented that Modi's appeal is unlikely to materially alter India's long-term appetite for gold, given the metal's deep cultural and financial significance. However, he noted that the comments could temporarily slow discretionary purchases [1]. The government's push to save foreign exchange is intended to alleviate economic pressures, but the underlying issue of high energy prices is unlikely to be resolved by reducing gold purchases [1].
CONCLUSION
Modi's call to halt gold purchases is a notable attempt to address India's economic challenges, but its impact may be limited due to the nation's strong cultural ties to gold. While shares of jewelers fell and short-term demand may slow, analysts expect long-term gold consumption to remain resilient. The broader economic pressures from high oil prices and a weak rupee continue to pose significant challenges.