Indian Pm Tells Country To Stop Buying Gold For A Year

Modi's Austerity Call Rattles Markets

Indian Prime Minister Narendra Modi has called on the country's citizens to halt non-essential gold purchases for at least a year, in a bid to protect India's foreign exchange reserves from mounting pressure. Bloomberg described it as "a surprising appeal in a country where the metal plays a vital role in savings, weddings and religious festivals."

Modi made the request during a public event in Secunderabad on May 10, framing it as an act of economic patriotism amid surging global energy prices linked to the US-Israeli conflict with Iran. The appeal extended beyond gold: he also urged citizens to reduce foreign travel, work from home where possible, and use public transport to cut fuel consumption.

The remarks hit domestic markets quickly. MCX gold pulled back from the Rs 1.54 lakh mark to around Rs 1,53,200 per 10 grams, while MCX silver fell roughly 1.53%, or Rs 4,252, to Rs 2,74,059 per kg. Jewellery stocks bore the brunt: Titan Co., India's largest jeweller, dropped as much as 6.6% in Mumbai, while Senco Gold and Kalyan Jewellers fell as much as 10.8% and 9.5%, respectively, according to FashionNetwork.

Why Gold, and Why Now

The timing reflects acute pressure on India's balance of payments. India spent $174.9 billion on crude and petroleum products in the financial year ended March 2026, according to CNBC, which noted that figure amounted to 22% of total imports. Gold ranked second in the import bill, with India spending nearly $72 billion on gold imports, making it the world's second-largest gold buyer after China.

India's foreign exchange reserves stood at $690.69 billion as of May 1, down from $728.5 billion in late February, according to Al Jazeera, citing Reserve Bank of India data. The International Monetary Fund has projected India's current account deficit will reach $84 billion in 2026, adding urgency to Modi's call for voluntary restraint.

The cultural weight of the appeal should not be underestimated. According to the World Gold Council, weddings alone generate approximately 50% of annual gold demand in India, and gold is considered auspicious across Hindu and Jain traditions. Whether consumers will follow the prime minister's guidance remains an open question, with reactions on social media ranging from support to sharp criticism.

Sources:
Bloomberg: Modi Asks Indians to Stop Buying Gold, Hitting Jewelry Stocks
CNBC: Modi says Iran war poses severe risks to India
Al Jazeera: Why is Modi asking Indians to avoid foreign trips and gold?