Why PM Modi asked Indians to avoid buying gold for a year amid West Asia war?

As global tensions push energy markets into turmoil, Prime Minister Narendra Modi has issued one of his most unusual yet urgent appeals to Indian families. With crude oil prices soaring and the US-Iran conflict disrupting key trade routes, he has called on citizens to temporarily rethink their spending habits. His request to avoid buying gold for one year has especially drawn nationwide attention, touching a nerve in a country where gold carries deep emotional, cultural and financial significance. Yet behind this appeal lies a pressing economic reality driven by rising import costs and mounting pressure on India’s foreign exchange reserves.

The Prime Minister made the remarks as global crude prices spiked due to escalating tensions in West Asia and concerns over security in the Strait of Hormuz — one of the world’s busiest and key oil transit zones. According to reports, Brent crude has surged from around 70 dollars a barrel to nearly 126 dollars in recent weeks, dramatically increasing India’s energy import burden. Even without announcing any immediate increase in fuel prices, he stressed the urgency to reduce petrol and diesel consumption in order to protect the country’s foreign exchange reserves.

Why gold is suddenly a national concern

PM Modi’s appeal to skip gold purchases for a year is rooted in India’s massive dependence on imported precious metal. The country is among the world’s largest buyers of gold, and demand usually peaks during the wedding season. Since over 90 per cent of domestic gold needs are met through imports, any surge in demand leads to a significant outflow of dollars.

As per reports, India generally imports 700 to 800 tonnes of gold each year, and the cost has been rising sharply. In 2025 to 2026, gold imports surged 24 per cent to a record 71.98 billion dollars, compared to 58 billion dollars the previous year. Imports were 45.54 billion dollars in 2023 to 2024 and 35 billion dollars in 2022 to 2023. This steep rise in gold and precious metal imports has played a major role in widening India’s trade deficit to 333.2 billion dollars in 2025 to 2026.

How reduced gold buying can help the economy

It is believed that a temporary drop in gold purchases could immediately ease pressure on India’s foreign exchange reserves. According to experts:

• A 30 to 40 per cent decline in gold imports can save 20 to 25 billion dollars.
• A 50 per cent reduction can save nearly 36 billion dollars.
• These savings can offset a significant portion of the current account deficit.

With crude oil prices well above 100 dollars a barrel and India importing nearly 88 per cent of its oil needs, every dollar saved becomes crucial. Money not spent on gold imports can instead be diverted to essential energy purchases, helping stabilise the rupee and reducing the risk of inflationary shocks.

How US-Iran conflict influencing global gold prices

The ongoing US-Iran war has triggered significant turbulence in international gold markets, with prices swinging sharply in response to every flare up or setback in West Asia. Gold traditionally acts as a safe haven asset during periods of geopolitical unrest which encourages investors to increase their purchases whenever global tensions rise. This time, however, the situation is more complex. Crude oil prices have surged because of the conflict whichhas raised concerns about persistent inflation and the possibility of higher interest rates across major economies. For India, the spike in global gold prices adds further strain, as the country depends heavily on imported gold purchased in foreign currency.