• Indian Prime Minister Narendra Modi urges citizens not to buy Gold for a year to save foreign exchange.
• Modi’s pledge comes along with other cost-cutting recommendations as the country struggles with high Oil prices.
• Analysts don’t expect the announcement to significantly hit demand for Gold.

Indian Prime Minister Narendra Modi urged the nation’s citizens to avoid buying Gold for a year, in an effort to cut spending and save foreign exchange as the country grapples with the macroeconomic consequences of the Iran war. 

“For a year, be it any function, we shouldn’t buy Gold jewelry,” Modi said on Sunday, according to Bloomberg, along with other announced cost-cutting measures such as fuel conservation, increasing working from home or limiting overseas trips. 

Modi’s recent call is significant because India (along with China) is the world’s largest consumer of Gold. Prices of the precious metal haven’t moved significantly in response to the news, as it is unclear if Indians will follow these recommendations, but shares of Indian jewelers fell sharply afterwards.

Indian Gold demand stood at 151 tonnes in the first quarter of 2026, marking a 10% year-on-year increase, driven by a 54% surge in investment, according to the World Gold Council (WGC). 

Still, while the commodity’s total demand rose, that for jewelry dropped 19% due to record-high prices, the data shows. Spending, however, surged to a record high, underscoring resilient consumer demand but also adding to Modi’s worries:

India, along with many other Asian countries, is facing the consequences of the prolonged conflict in the Middle East. The Iran war has sent Oil prices surging, and India imports almost 90% of its crude needs. The spike in prices is expected to deteriorate the country’s balance of trade and, to make matters worse, the Indian Rupee’s (INR) record low against the US Dollar (USD) is making imports even more expensive, as seen on the USD/INR daily chart below.

Gold is considered one of the safest stores of wealth for Indians. Apart from its value as a financial asset, the precious metal is deeply embedded in the local culture as it’s seen as an auspicious present for weddings and plays a central role in many religious and regional festivals.

Jateen Trivedi, Vice President and Research Analyst for Commodity and Currency at LKP Securities, told the Indian business newspaper The Economic Times that Modi’s appeal is unlikely to materially alter India’s long-term appetite for Gold, given how deeply the metal is embedded in savings behavior, investments and cultural buying patterns. Still, he added that the comments could temporarily slow discretionary purchases.

Modi's words may slow short-term Gold purchases, but India's deep cultural and financial ties to the precious metal are unlikely to change. The government's push to save foreign exchange seeks to alleviate the country’s economic pressures, but the underlying issue – high energy prices – is unlikely to be resolved by buying less Gold.