Restrictions have triggered a buying frenzy. According to a recent report from The Economic Times in India, the Indian government's recent series of gold import control measures have not suppressed demand but instead sparked a panic-buying spree for wedding jewelry across the country. Meanwhile, Goldman Sachs precious metals analyst Lina Thomas reiterated her year-end gold price target, maintaining it at $5,400 per ounce.
The root cause is the sharp depreciation of the Indian rupee. As a major global oil importer, India has been significantly impacted by energy supply disruptions in the Middle East, leading to substantial foreign exchange outflows and pushing the rupee to historic lows. The Reserve Bank of India was forced to intervene by selling dollars to support the currency. To further stabilize the exchange rate, the Modi administration first urged citizens to reduce gold purchases and overseas travel, then substantially raised gold import tariffs. Days later, it directly restricted gold import quantities and warned that more emergency measures were under consideration to protect foreign exchange reserves.
The result has been counterproductive.
"Prices up 15% to 20% in two days": Panic buying sweeps across India. Reports indicate that a wave of panic gold buying has spread nationwide.
Jewelers report that consumers, fearing further policy tightening, are rushing to buy ahead of the June wedding season. The core logic driving this surge is simple: if they don't buy now, it may become more expensive or even unavailable later.
Rajesh Rokde, Chairman of the All India Gem and Jewellery Domestic Council, stated, "Over the past two days, sales of wedding jewelry have been 15% to 20% higher than the daily average."
The buying extends beyond immediate wedding needs. Varghese Alukkas, Managing Director of the Jos Alukkas jewelry chain with 65 stores, said, "Some people are even buying gold in advance for weddings scheduled from November to December because they fear the government might ban gold purchases."
At Zaveri Bazaar, Mumbai's largest gold jewelry market, traders estimate sales have increased by about 20% over the past two days. Suvankar Sen, Managing Director and CEO of jeweler Senco Gold, described the prevailing market sentiment: "Rumors are flying everywhere. Some say import duties will rise, others say the Goods and Services Tax might increase 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, with the remainder being advance stockpiling for winter events.
Surendra Mehta, National Secretary of the India Bullion and Jewellers Association, was more direct: "Both B2B and B2C transactions are happening; it's panic buying in the market. Gold is deeply ingrained in Indian culture. Consumers are buying wedding jewelry to hedge against potential future tariff hikes or restrictions on cash purchases."
Goldman Sachs: Year-end target $5,400, but caution advised short-term. Amid the retail buying frenzy, Goldman Sachs precious metals analyst Lina Thomas reaffirmed a long-term bullish stance on gold in a recent report, maintaining the year-end 2026 target of $5,400 per ounce.
However, the analyst also noted that central bank gold purchases have slowed—though the slowdown is less than previously anticipated. Goldman's updated 12-month moving average forecast model shows central bank monthly purchases averaged 50 tonnes in March, compared to a previous model estimate of 29 tonnes. Lina Thomas expects central bank buying to recover throughout 2026, averaging 60 tonnes per month.
Thomas's rationale is that central bank surveys indicate underlying demand for gold remains strong among nations, and recent geopolitical developments will further reinforce diversification intentions among both central banks and private investors.
But Thomas also issued a short-term risk warning. The report notes that gold is highly liquid. If private investors face liquidity pressures—for instance, if stock markets decline amid rising interest rates and weakening growth expectations—gold is often one of the first assets to be sold. In other words, gold may face pressure in the short term, but Goldman's directional view for the year-end remains unchanged.
Tighter restrictions fuel informal channels. Historical patterns show that government attempts to control capital outflows by restricting precious metals often backfire: once formal markets are constrained, demand shifts to informal channels, leading to increased gold smuggling.
Analysis also suggests that if traditional channels for buying gold and silver remain obstructed, India may eventually follow the path of other financially repressed developing nations, turning to non-fiat alternatives like Bitcoin and stablecoins to preserve value.
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