Why Does PM Modi Want Indians To Avoid Buying Gold For A Year?

In a country where gold is tied to weddings, festivals, and family savings, Prime Minister Narendra Modi’s appeal to avoid buying gold for a year immediately grabbed attention.

The timing also matters. Global geopolitical tensions have pushed investors towards safe-haven assets, sending gold prices sharply higher in recent months. For India, that creates a bigger economic challenge because the country imports most of the gold it consumes. India imported nearly $72 billion worth of gold in FY26 alone, according to recent reports.

So, was this just a short-term appeal made during a tense global environment? Or could it end up changing how Indians buy gold and how investors look at the metal in the coming months?

Why Did PM Modi Ask Indians To Avoid Buying Gold For A Year?

India may be one of the world’s biggest gold buyers, but it relies heavily on imports to meet that demand. Nearly 90% of the gold consumed in the country comes from overseas markets. So when prices rise globally, and demand stays strong at home, the impact is felt well beyond jewellery stores.

That pressure has become more visible this year. India’s gold import bill climbed to a record high of nearly $72 billion in FY26, up 24% from the previous year. The jump also added to the country’s trade deficit, which widened to $333.2 billion during the financial year.

There is pressure building on the external side as well. RBI data showed that India’s foreign exchange reserves dropped by $7.794 billion to $690.693 billion in the week ended 01 May 2026. Back in February, reserves had touched a record $728.494 billion.

For a country that imports most of its gold, that can quickly translate into larger dollar outflows.

Seen in that context, PM Modi’s appeal appears more like a call for temporary restraint rather than a long-term shift away from gold.

Can India’s Gold Demand Really Slow Down?

Gold buying in India is rarely driven by prices alone. A large part of the demand comes from weddings, festivals, and family traditions. It also comes from the belief that gold is a safer way to store wealth over time. Even during periods of sharp price increases, buying usually slows before picking up again later.

The market reaction, however, was immediate. Gold prices have fallen 0.25% to ₹152,150 per 10 grams on 11 May 2026. Jewellery stocks also came under pressure soon after PM Modi’s remarks.

Shares of Titan Company fell over 6%, while Kalyan Jewellers India dropped more than 8%. Stocks like Sky Gold, Senco Gold, PN Gadgil Jewellers, PC Jeweller, and Tribhovandas Bhimji Zaveri also declined between 5% and 12% as investors reacted to fears of weaker near-term demand.

But gold prices do not move only because of Indian jewellery demand. Global uncertainty and inflation concerns continue to keep gold prices elevated across international markets.

Also Read - Railways Spend 98% Of FY26 Capex By February; Can Boost Rail Infra Stocks

What Should Investors Watch Going Forward?

The immediate impact of PM Modi’s remarks may be seen more in consumer sentiment and jewellery stocks than in gold ownership itself. If buyers postpone purchases for a few months, companies that depend heavily on festive and wedding demand could remain under pressure.

At the same time, many households are unlikely to move away from gold completely because it continues to be viewed as a long-term store of value.

Some investors may also avoid making large jewellery purchases at current prices. They may turn towards Gold ETFs or digital gold, which are more practical right now.

Source:

Livemint

Hindustan Times

NDTV