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Prime Minister Narendra Modi, on Sunday, at a rally in Hyderabad, called for boycotting gold purchases and 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. 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 and refrain from avoidable foreign travel is a crisis management response to the current account deficit problem caused by high crude prices. This call for austerity has a slightly negative implication for economic growth in FY27."
To understand the implications of Modi's comments, one must understand how gold buying impacts the Indian economy.
It is no secret that Indians have a long affinity for gold. 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 and $35 billion in 2022-23.
The rise in imports of these precious metals has pushed the country's trade deficit to $333.2 billion during 2025-26.
Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said India is one of the world’s largest gold importers, and during periods of elevated crude oil prices and global uncertainty, high gold imports put additional pressure on the country’s trade deficit and the rupee.
He said that Modi's message should be viewed "primarily from the perspective of India’s macroeconomic stability and import management."
NS Ramaswamy, Head of Commodity & CRM at Ventura, said the PM's appeal targets the consumption of physical gold jewellery, as evidenced by today's share price action.
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%.
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 and 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.
In terms of demand trends, too, analysts do not see any major shift. Trivedi said that appeal gold remains deeply linked to savings, investment, and cultural buying patterns in India.
"However, in the short term, it may slow discretionary purchases, particularly in jewellery demand, and create cautious sentiment across bullion and jewellery-related businesses," he added.
Gold is caught in a macro tug-of-war between bearish pressure from yields and supportive demand driven by uncertainty and inflation concerns.
That said, Ramaswamy made a case for its lucrative long-term appeal, with an expected 12-15% upside in 2026 from the present levels of $4,680 or ₹152,000.
He said, "Global physically-backed gold ETFs recorded strong inflows of $6.6 billion in April, marking a sharp reversal from the notable outflows seen in March. Due to a massive structural shift in demand from the Central Banks buying diversifying away from the US Dollar, gold is holding on. Rising global debt is keeping investors in gold as a financial umbrella."
The persistence of higher interest rates and tighter financial conditions is acting as a near-term headwind for gold, he observed.
Technical indicators are also signalling a larger secular bullion trend, with medium-term consolidation likely. "The market remains highly sensitive to US bond yields, Fed expectations, and geopolitical developments. Recent technical indicators suggest gold needs to sustain above the $4,730–4,800 zone for stronger bullish continuation. However, below $4500, selling momentum is likely to increase in the upcoming weeks," Jagad noted.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Saloni Goel has over nine years of experience as a business journalist, with a strong track record of covering the financial markets. Over the course of her career, she has reported extensively on global and domestic equities, IPO market activity, commodities, and broader macroeconomic trends. Her reporting reflects a keen eye for detail, data-driven analysis, and the ability to spot emerging themes early.<br> At Mint, Saloni has been part of the markets team for nearly two years, where she currently works as Chief Content Producer. In this role, she plays a key part in shaping market coverage, driving editorial strategy, and ensuring timely, accurate, and insightful reporting across. She has been closely involved in breaking news coverage and in crafting stories that help decode the complex financial developments.<br> Before joining Mint, Saloni worked with some of India’s leading business newsrooms, including The Economic Times and Business Standard. Throughout her career, she has worn multiple hats—ranging from reporting and editing to contributing in-depth features and identifying new storytelling formats and market trends.<br> Her experience in fast-paced digital newsrooms has given her an edge in simplifying complex market concepts without losing analytical depth. Outside of work, Saloni enjoys reading books and spending time with her pet.
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