PM Modi Asked Indians To Skip Gold. Festivals Will Put That To The Test

The upcoming festive season brings a fresh test for Prime Minister Narendra Modi's appeal to Indians to avoid buying gold unless necessary.

PM Modi first urged people in May to postpone non-essential gold purchases for a year to help conserve foreign exchange amid the economic fallout of the Iran war conflict. He renewed the appeal in September, advising people to buy gold only when necessary. 

However, India has entered the season when gold buying traditionally picks up, with festivals and weddings driving demand.

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Why Gold Is A Forex Concern

India imports most of the gold it consumes. In the second quarter of 2026, imports accounted for 82 per cent of India's gold supply, with recycling making up much of the rest. 

Therefore, every surge in physical gold demand can translate into higher import requirements and dollar outflows. And the concern is not theoretical. Gold was among India's top five imports in 2025, accounting for about 8 per cent of merchandise imports, according to the World Gold Council. 

India's forex reserves stood at $780.78 billion as of September 11, according to RBI data. They had touched a record $785.71 billion a week earlier. 

The Festive Season Could Change The Equation

Gold buying has already shown signs of becoming more price-sensitive. The World Gold Council said in June that PM Modi's appeal appeared to weigh on discretionary purchases, particularly in urban markets. 

But tradition could prove harder to change. A World Gold Council survey has found that festivals are among the main occasions for Indians to buy gold. Dhanteras and Akshaya Tritiya alone account for a significant share of festival-related purchases. 

Recent trends show that consumers are adapting rather than abandoning gold.

Gold sales during Ganesh Chaturthi this year fell about 15 per cent in volume. Buyers were choosing lighter jewellery and exchanging old gold, while demand for coins and bars remained visible. That could be the pattern to watch through Dhanteras and Diwali.

'Festive Gold Buying Is Not Just About Prices'

Shubham Gupta, CFA, Co-Founder and CEO of Growthvine Capital, said the emotional side of gold buying cannot be ignored. "The practice of buying gold during festivals is a combination of logical and emotional factors," Gupta told NDTV.

He said families may consider gold prices, India's import bill and pressure on forex reserves, but festive purchases are also linked to tradition and auspiciousness. "A more appropriate question for an individual is: how much gold do I currently own?" Gupta added.

If a household already has a large allocation to gold, the festive season does not necessarily have to mean another substantial purchase. A symbolic purchase, or no additional purchase, could also be an option.

For those buying gold purely as an investment, Gupta said physical gold is not the only route. Gold ETFs or gold mutual funds can provide exposure without requiring a jewellery purchase.