Gold sales slump after PM Modi appeal; demand hit but experts see long-term resilience

Gold sales fall across cities after Modi asked citizens to avoid non-essential purchases; experts warn short-term dip, expect prices to stay firm

Jewellery shops from Guwahati to Bengaluru reported sharp declines in footfall and transactions this week after Prime Minister Narendra Modi urged citizens to refrain from non-essential gold purchases for a year to conserve foreign exchange, industry officials and local reports said.

Immediate drop
Retailers and trade bodies described an abrupt slowdown in discretionary buying within days of the appeal made on 10 May. “Walk-ins for discretionary purchases and impulse buys have dropped noticeably,” said a sales manager at a Delhi showroom who spoke on condition of anonymity. State-level reports — including from Assam and Karnataka — put declines anywhere between 30% and as high as 80% in the first 10 days following the appeal.

Consumer sentiment shifts
A LocalCircles poll cited by industry sources found roughly six in 10 prospective buyers said they would avoid buying gold for a year following the prime minister’s request. Jewellers across markets said customers are more price-sensitive and cautious, taking longer to finalise purchases and asking more about buyback and exchange options.

“We are seeing greater interest in lightweight pieces and upgrade schemes,” Raghav Dhir, director at Dhirsons Jewellers, told reporters. “But jewellery demand is tied to weddings, festivals and gifting, so it won’t vanish overnight.”

Price movement and policy
Gold prices have not eased consumer pressure. The India Bullion and Jewellers Association (IBJA) placed the 24K gold rate at ₹1,58,350 per 10 grams on 22 May, up from about ₹1,51,140 on 8 May, days before the appeal and the subsequent temporary import duty increase from 6% to 15%. Analysts say higher import duty and global volatility have kept domestic prices elevated, reducing the scope for immediate relief for buyers.

Why the appeal was made
Officials say the request aimed to curb gold imports — India sources over 90% of its bullion needs from abroad — and preserve forex reserves amid high crude oil bills caused by tensions in West Asia. Annual imports typically exceed 800 tonnes, and the government’s plea was framed as a temporary conservation measure to ease pressure on the current account.

Expert outlook
Industry and market experts diverge on how deep and how long the slowdown will be. Several analysts expect only a temporary dip in jewellery demand, given the cultural role of gold in India.

“Gold and silver are not just price products; much demand comes from culture and long-term savings. Demand may soften, but it won’t disappear,” Navy Vijay Ramavat, managing director of Indira Securities, said.

Bullish case
A number of market participants pointed to four factors likely to keep a floor under prices: ongoing geopolitical tensions, central bank buying, inflation concerns and volatility in global markets. Some jewellers and brokers forecast gold could rise to between ₹1,90,000 and ₹2,10,000 per 10 grams by the end of 2026, citing sustained central-bank accumulation and safe-haven flows.

More cautious views
Not everyone is similarly optimistic. Hemant Sood of Findoc Investmart outlined a more conservative scenario, suggesting domestic 24K rates could trade in a range of ₹1,28,000–₹1,45,000 by December 2026 depending on global rates and macro moves.

Ground-level impact
At street-level showrooms in Bengaluru and Guwahati, owners said daily sales volumes have fallen and staff are offering discounts or flexible payment schemes to close deals. Wedding planners in Delhi reported some clients postponing ornament purchases or shifting budgets toward other items such as venue or catering.

What’s next
For now, jewellers are watching wedding season bookings and festival demand closely. “If weddings proceed as planned and gold prices stabilise, we expect some recovery,” a senior trade official said. The government has not signalled any binding ban; the appeal remains voluntary, leaving retailers and buyers to balance cultural habits against a national economic ask.

‘Compromised PM no longer capable’: Rahul says ‘don’t buy gold’ advice is proof of Modi govt’s failure

 Congress leader Rahul Gandhi launched a sharp counterattack on Monday against Prime Minister Narendra Modi’s recent “seven appeals” to the public, arguing that asking citizens to cut back on gold, travel, and cooking oil was not sound advice but an admission of the government’s own economic mismanagement.

In a post on X, Gandhi said the Prime Minister appeared “compromised” and no longer capable of running the country.

“Yesterday, Modi ji asked the public to make sacrifices—don’t buy gold, don’t travel abroad, use less petrol, reduce consumption of fertilisers and cooking oil, take the metro, work from home. These are not suggestions. These are failures,” Gandhi wrote.

He added that after 12 years in power, the government had reached a point where the Prime Minister had to tell people what to buy, what not to buy, where to go, and where not to go.

PM’s Secunderabad pitch

The exchange began on Sunday. Speaking at a rally in Secunderabad, PM Modi had stressed the need to reduce dependence on imports to save foreign exchange. He listed seven specific asks: reduce petrol and diesel use, promote work-from-home models, cut down on edible oil consumption, halve chemical fertiliser use, postpone non-essential foreign travel, and avoid buying or donating gold for one year.

Officials said the appeals were prompted by rising global prices due to conflicts in West Asia. India, which does not have large domestic oil reserves, remains vulnerable.

Opposition piles on

But opposition parties quickly rejected the narrative. Congress general secretary Jairam Ramesh claimed the economic situation was far more serious than official figures suggested. Samajwadi Party chief Akhilesh Yadav said the BJP had failed on both the economy and foreign policy.

“As soon as elections ended, the government suddenly remembered a ‘crisis’. In reality, there is only one crisis for the country, and its name is BJP,” Yadav said.

Trinamool Congress MP Saket Gokhale questioned why ordinary citizens were being asked to make sacrifices while ministers continued using Air Force aircraft and large convoys. He also asked why the announcements came only after several state elections had concluded.

The numbers behind the appeal

Government data and industry reports show why foreign exchange outflows have become a concern.

Annual gold expenditure has crossed ₹6 lakh crore, up from ₹4.89 lakh crore in 2024–25. The World Gold Council noted that in the first quarter of 2026, investment demand for gold in India surpassed jewellery demand for the first time.

Indians spent ₹3.65 lakh crore on foreign travel in 2025–26, a sharp rise from ₹2.72 lakh crore in 2023–24.

Fertiliser imports touched ₹1.50 lakh crore this year, a 76 per cent jump. A significant portion comes from Qatar, making supplies vulnerable to regional instability. Prices have remained elevated as a result.

Crude oil, however, remains the biggest drain. India imports nearly 70 per cent of its requirements. While the oil import bill declined to ₹10.35 lakh crore in 2025–26 from ₹11.66 lakh crore the previous year, crude prices have surged nearly 50 per cent in the past two months. Sources familiar with the matter said the bill could climb to ₹17 lakh crore if the conflict widens.

What happens now

For now, the political battle lines are clear. The government argues it is preparing the public for hard choices in the national interest. The opposition sees an administration struggling to shield the economy from global shocks.

Rahul Gandhi ended his post with a pointed remark: “A compromised PM cannot fix this. A failed govt cannot ask for more sacrifices.” The Prime Minister’s Office has not issued a direct response.