Why is PM Modi asking not to buy gold?
Prime Minister Narendra Modi, on Sundayat a rally in Hyderabad
called for
- boycotting gold purchases
- foreign travel, among other measures, to strengthen the economy from the adverse impacts of the West Asia crisis.
PM Modi batted for conserving foreign exchange reserves and reducing fuel consumption as global supply chains remain affected.
“It is time for us to use petrol, diesel and gas with great care,” Modi said. “We must make efforts to use only as much as is needed to save foreign currency and reduce the adverse effects of war crises.”
His comments come as crude oil and gold account for the bulk of India's import costs and are draining India's foreign exchange reserve.
RBI data shows that foreign exchange reserves
- fell by $7.794 billion to $690.693 billion in the week ended 1 May,
- from a record high of $728.494 billion in the week ended 27 February,
- before geopolitical tensions in the Middle East triggered sustained pressure on the rupee and prompted RBI intervention through dollar sales.
The US-Israel-led war against Iran
is in its third month with no signs of a resolution on the horizon.
oil prices
This war has pumped up global oil prices, which does not bode well for India, especially as it relies on crude imports to meet 80-85% of its needs.
A 10% rise in crude prices -
cuts economic growth by 15 basis points and lifts inflation by 30 basis points, according to the central bank.
Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said, "PM Modi’s appeal to the nation to curb the consumption of
- petrol/diesel,
- gold,
- chemical fertilisers and
- edible oil
- avoidable foreign travel is a crisis management response to the current account deficit problem caused by high crude prices.
We are also one of the world's largest consumers
typically importing 700–800 tonnes annually to meet over 90% of its domestic demand.
These massive gold imports form a major part of our import bill, especially now that rising prices are also increasing import costs.
In 2025-26 - gold imports
- jumped 24% to an all-time high of $71.98 billion.
- Gold imports stood at $58 billion in 2024-25.
- It was $45.54 billion in 2023-24
- $35 billion in 2022-23.
country's trade deficit
The rise in imports of these precious metals has pushed the country's trade deficit to $333.2 billion during 2025-26
Jewellery stocks hit the most
Jewellery stocks took the brunt
of the prime minister's call and tumbled up to 12% in intraday deals today.
- Titan share price declined as much as 6.4%,
- Kalyan Jewellers India shares dropped 8.3%,
- Sky Gold stock price plunged 12.2%,
- Senco Gold stock tanked 10.7%,
- PN Gadgil Jewellers shares slipped 7%,
- PC Jeweller shares fell 5% and
- Tribhovandas Bhimji Zaveri shares cracked 6.3%.
Will Modi's message dent gold's long-term appeal?
Meanwhile, gold prices also pulled back
declining 0.25% to ₹152,150 per 10 grams today.
However, investors must understand that gold is currently being driven largely by global factors and not domestic triggers:
- a strong US dollar,
- rising bond yields/delayed Fed rate cuts
- higher oil-driven inflation fears.
Amid the Middle East crisis, gold has acted against its nature
as a natural hedge and declined almost 5%, mainly as investors worry that higher crude oil prices drive inflation and dash central bank rate cuts.
"Markets are pushing back expectations for Fed cuts into late 2026, which is negative for non-yielding assets like gold.
So, further downside is possible in the coming sessions/weeks, especially if US CPI and bond yields remain firm.
However, unless the long-term macro narrative changes completely, deeper declines may eventually attract strategic buying interest again," said Virat Jagad, Sr Technical Research Analyst at Bonanza.
gold remains deeply linked to
- savings,
- investment,
- cultural buying patterns in India.
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