Gold is often regarded as a safe haven asset during times of uncertainty and war. When other investment instruments underperform, gold prices usually tend to rise during geopolitical tensions and economic crises. Remember how gold prices surged quickly during military conflict that took place between India and Pakistan after Pahalgam attack in 2025? However, this time, gold prices have not risen sharply despite the ongoing Iran-Israel-US conflict. Instead, it is the LPG and crude oil prices that are soaring due to fears of supply disruptions from Middle East due to Strait of Hormuz closure for most commercial shipping. So, gold has failed to deliver extraordinary returns this time.
Global investors are currently more worried about rising energy prices, inflation and slowing economic growth than shifting heavily into gold. At the same time, high import duties and government efforts to reduce gold demand in India have also limited aggressive buying by the investors. In May 2026, Prime Minister Narendra Modi recently asked Indians not to buy too much gold for one year to reduce pressure on India’s foreign exchange reserves and import bill. This was not investment advice. It was an appeal to help India save foreign currency during the West Asia crisis.
The aim is to reduce the outflow of US dollars spent on gold imports. Currently, gold is one of the hottest financial topics in India in May 2026. Let’s find out why and if not gold, then what experts are recommending investors buy instead.
While speaking at an event in Hyderabad, on 10 May 2026, PM Shri. Narendra Modi urged citizens to temporarily reduce gold purchases over the next one year. He said that cutting down on non-essential gold purchases can help reduce pressure on forex reserves and reduce imports. Just days after the speech, the central government increased customs duty on gold, silver and other precious metals.
Over the last few days, gold prices have been very volatile because of PM Modi’s appeal, higher import duty on gold and silver, tensions in the Middle East and rising crude oil prices.
According to the India Bullion and Jewellers Association (IBJA), the price of 22-carat gold was Rs 15,441 per gram on May 15 2026. On 11 May 2026, the price was Rs 14,675 per gram. This means gold prices increased by Rs 766 per gram within just a few days.
India is the second largest gold consuming country in the world. Every year, Indians buy hundreds of tonnes of gold. However, India produces very little gold on its own.
The country buys around 700 to 800 tonnes of gold every year while local mines in the country are responsible for production of only about 1 to 2 tonnes annually. Because of this, India depends on imports for more than 90% of its gold needs.
If India buys significantly less gold for a year, it can save billions of dollars in imports. Around $20-25 billion (USD) can be saved if gold imports fall by 30%-40%. In case of 50% fall in gold imports, India can save nearly $36 billion. This amount is almost half of India’s expected current account deficit (CAD). In simple words, if people buy less gold, fewer dollars will go out of India. This can help the country save a huge amount of foreign currency.
Right now, crude oil prices are above $100 per barrel and India imports around 88% of its oil needs. Because of this, saving dollars matters a lot. The money saved from lower gold imports can be used by the central government to pay for essential oil and energy imports instead.
Gold is seen as a safe investment during wars and global problems. During such times, many people start buying gold. Because of this, gold prices increase and India has to import more gold so as to meet the demand of Indian consumers. This leads to a higher outflow of US dollars from the country. At the same time, crude oil prices also rise during wars and global tensions. So, India faces two major problems together, i.e., expensive oil imports and higher gold imports. This increases pressure on India’s economy.
Whenever India imports gold, importers need US dollars so they can make payment to other countries. More demand for dollars causes the Indian rupee to weaken and increase pressure on foreign exchange reserves. However, if people reduce gold buying for some time like for a year, the demand for US dollars can fall. This can reduce pressure rupee has been facing and help India save its foreign exchange reserves.
While many people choose to buy gold during times of uncertainty and war, gold is not the only investment option available. There are many other investment choices that people can consider. These investment options are also backed by the government, making them safe and trusted. They are as follows:
Equity mutual funds
Index funds
Fixed deposits
Government bonds
Public Provident Fund
National Pension System
Real Estate Investment Trusts
It is believed by many experts that stock market investments can create good wealth over the long time even if in the short term, the prices move up and down. Compared to physical gold, regular SIP investment in mutual funds may give better long-term returns, according to some experts.
At the same time, people who find the stock market investments to be too risky can go for safer investment options like fixed deposits and government bonds, especially during uncertain times.
Disclaimer: This article contains personal opinions of author and does not represent the views of Registrationwala. The author has tried their best to keep information as accurate as possible using publicly available and official sources. However, some facts/opinions may change over time/contain some errors. Readers are, therefore, advised to verify all information with official government/financial sources before making any decision.
Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.
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