India's gold restrictions trigger panic buying spree; Goldman Sachs maintains bullish year-end gold price target of $5,400.

The more restrictions, the more panic buying. According to the latest report from India’s Economic Times, the Indian government’s recent introduction of a series of restrictions on gold imports has not suppressed demand; instead, it has triggered panic buying of wedding jewelry across the country. Meanwhile, Lina Thomas, gold and precious metals analyst at Goldman Sachs, reiterated that the year-end target price for gold remains at $5,400 per ounce. The cause of the situation is the rapid depreciation of the Indian rupee. Because energy supplies in the Middle East have been disrupted, India, as the world’s third-largest oil importer, is hit hardest, with a large outflow of foreign exchange. The rupee has fallen to a historic low, prompting the Reserve Bank of India to enter the market to sell dollars and stabilize the currency. To further stabilize the exchange rate, the Modi government first called on the public to reduce gold purchases and overseas travel, then sharply raised import duties on gold, and days later directly limited the amount of gold imported, warning that more emergency measures are being studied to protect foreign exchange reserves. The result has been the opposite of what was intended. “Prices up 15%-20% in two days”: a wave of panic buying sweeps India According to India’s Economic Times, the wave of panic gold buying has spread nationwide. Jewelry merchants say consumers are concerned policies will get even stricter, so many are rushing to make purchases ahead of the June wedding season. The logic driving this buying spree is simple: if you don’t buy now, prices may be higher later—or gold may be unavailable. Rajesh Rokde, chairman of the All India Gem and Jewellery Domestic Council, said: “In the past two days, sales of wedding jewelry have been 15% to 20% higher than the daily average.” The scope of panic buying has exceeded immediate wedding needs. Varghese Alukkas, Managing Director of the Jos Alukkas chain with 65 stores, said: “Some people are even buying gold in advance for weddings in November and December, because they worry the government might ban gold purchases.” At Mumbai’s largest gold jewelry market, Zaveri Bazaar, traders estimate sales over the past two days have risen by about 20%. Senco Gold Managing Director and CEO Suvankar Sen described the atmosphere in the market: “Rumors are everywhere. Some say import duties will increase, some say the value-added tax (GST) will rise from the current 3%. This uncertainty is prompting consumers to buy wedding jewelry.” He added that currently about 60% of purchases are related to the upcoming wedding season, while the rest are for winter events in advance. Surendra Mehta, National Secretary of the India Bullion and Jewellers Association (IBJA), put it more directly: “Both B2B and B2C transactions are happening, and the market is seeing panic buying. Gold is deeply rooted in Indian culture—consumers buy wedding jewelry to hedge against possible future hikes in import duties or restrictions on cash purchases.” Goldman Sachs: Year-end target is $5,400, but caution needed in the short term Amid a retail buying frenzy, Lina Thomas of Goldman Sachs reiterated a bullish long-term outlook for gold in her latest report, maintaining a target price of $5,400 per ounce by the end of 2026. However, analysts also noted central bank gold purchases have slowed—although the slowdown is less than expected. Goldman’s updated 12-month moving average (12MMA) forecast model shows that in March this year, the average monthly gold purchases by central banks was 50 tons, compared to a previous estimate of 29 tons. Lina Thomas expects central bank gold buying to recover throughout 2026, reaching an average of 60 tons per month. Thomas’s reasoning: Central bank surveys show underlying demand for gold remains strong, and recent geopolitical developments will further encourage central banks and private investors to diversify their asset allocations. But Thomas also issued a short-term risk warning. The report states that gold is highly liquid, and if private investors face liquidity stress—for example, if the stock market falls amid rising interest rates and weak growth expectations—gold is often among the first assets to be sold. In other words, gold may be pressured in the short term, but Goldman’s outlook for year-end remains unchanged. The stricter the restrictions, the more active the gray channels Historical patterns show governments trying to control capital outflows by restricting precious metals often backfire: once the formal market is restricted, demand shifts to informal channels, leading to increased smuggling of gold. The analysis also mentioned that if traditional channels for purchasing gold and silver continue to be obstructed, India may eventually follow the path of other financially suppressed developing countries, turning to illegal currency alternatives like bitcoin and stablecoins for value preservation. Risk advisory and disclaimer The market is risky and investment requires caution. This article does not constitute personal investment advice and does not take into account any user’s specific investment goals, financial situation, or needs. Users should consider whether any opinions, views, or conclusions in this article suit their particular circumstances. 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