Modi calls on the Indian people to stop buying gold for one year.

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Indian Prime Minister Modi has made a rare call for the public to stop buying gold for at least one year. This move directly impacted domestic jewelry stocks and reflects the deep predicament of India's foreign exchange reserves and trade deficit under the backdrop of the Middle East war.

Modi gave a speech on Sunday, urging people not to purchase gold jewelry for any occasion, while also calling for reduced fuel consumption and less unnecessary overseas travel. He stated that India spends a large amount of foreign exchange on gold imports, and the public should avoid non-essential consumption.

This statement was quickly transmitted to the capital market. India's largest jeweler Titan Co. dropped as much as 6.6% intraday on Monday, while Senco Gold Ltd. and Kalyan Jewellers India Ltd. plummeted by 10.8% and 9.5% respectively.

Trade Deficit Under Pressure, Gold Imports Become Focus

According to Bloomberg, Modi's unusual call is rooted in the fact that the Middle East war and the resulting energy shortage are continuing to widen India's trade deficit and drag down the rupee exchange rate.

On India's import bill, gold is the second largest imported commodity after oil, and India is also the world's second largest gold importer. Meanwhile, Indian banks have recently encountered administrative bottlenecks in gold imports, and related disruptions are expected to provide some support to the trade balance in April.

Gold Deeply Embedded in Culture, Policy Effectiveness Uncertain

Whether Modi's call can truly change the consumption behavior of the Indian public remains unknown. Gold holds a central place in India's economy and cultural life—many Indians regard it as an important savings tool, and buying gold during weddings or various religious festivals is seen as auspicious.

This cultural inertia means that, even with advocacy from the highest leader, its actual restraining power is quite limited. Uncertainty about the policy's effectiveness may continue to affect the short-term performance of the jewelry sector.

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