‘Gold prices unlikely to crash following PM Modi’s appeal’:Metal may get more costly by year-end, say experts

Prime Minister Narendra Modi’s second appeal to citizens to avoid non-essential gold purchases to reduce foreign exchange outflows amid global economic uncertainty has impacted commodity prices. Gold silver prices: Silver has become cheaper by nearly ₹9,000 and gold by ₹4,500 in just two days. According to the India Bullion and Jewellers Association (IBJA), the price of 10 grams of 24-carat gold was quoted at ₹1.51 lakh. While the price of one kilogram of silver was quoted at ₹2.28 lakh. Expert outlook: According to insights shared by bullion expert, Ajay Kedia, founder, Kedia Advisory, PM Modi’s appeal to avoid non-essential gold purchases may put pressure on India’s physical demand, similar to the slowdown seen after the May 2026 advisory and higher import duties. He says India imports nearly 700 to 900 tonnes of gold annually, making overall demand sensitive to government policy. Will people stop buying jewellery during upcoming wedding season? Kedia says that wedding-related purchasing is expected to stay strong because of India’s cultural connection to gold. Why gold prices unlikely to fall too much despite appeal: Kedia says that central banks globally have bought over 1,000 tonnes of gold annually in recent years. Continued de-dollarisation, geopolitical tensions, improving ETF flows, and lower US interest rate expectations would continue to support global prices. Investment demand is expected to maintain gold’s bullish momentum. Gold prices could move toward $5,100 per ounce by the end of 2026, while silver could move toward $90 per ounce. -Kedia Advisory, founder, Ajay Kedia While Vishal Dholiya, Founder Managing Director at Hastmilap Aspiri says by the end of 2026, he expects gold prices to hover around ₹1.55 lakh to ₹1.70 lakh per 10 grams, while silver could trade in the range of ₹2.30 lakh to ₹2.80 lakh per kg. However, he has cautioned investors about some rates volatility along the way. The Prime Minister’s appeal may reinforce prudence, but the larger behavioural shift is being driven by sustained high prices. -Supriya Kataria, Founder, Kumari Fine Jewellery
What happens next for gold buyers? According to Kedia, in the short term, non-essential physical buying of gold jewellery in India may remain subdued due to government advisories. However, traditional demand for weddings and festivals will likely continue. For financial investors, Gold ETFs and Gold Mutual Funds offer an alternative to physical gold without requiring storage space or security costs. Because international fundamentals remain firm, the market analyst expect gold’s overall price trend to stay positive through the rest of 2026. What PM Modi actually said? Prime Minister Narendra Modi had appealed the citizens to avoid non-essential gold purchases and defer unnecessary foreign travel. The primary goal of this appeal was to reduce the outflow of foreign currency reserves. How can avoiding gold purchases help increase India’s foreign currency reserves? India imports almost all of the gold it consumes. When gold imports rise, India spends large amounts of US dollars. This puts pressure on the Indian rupee and foreign currency reserves. The appeal apparently also means that citizens may stop investing in financial assets like Gold Exchange Traded Funds (ETFs) or Mutual Funds (MFs). It looks like a voluntary advisory aimed specifically at discretionary physical gold purchases, such as decorative jewellery or idle gold bars imported from abroad. It is not a legal ban on buying gold. How gold prices are determined in India? Gold prices in India do not depend on local demand alone. These are calculated based on multiple international and domestic factors: International Gold Rate: The base price of gold is set in international markets (London and New York) in US Dollars per troy ounce. USD-INR Exchange Rate: Since India imports gold in US Dollars, a weaker Rupee makes gold more expensive in local currency. Import Duty and Taxes: Basic customs duty levied by the Government of India, along with a 3% Goods and Services Tax (GST), is added to the import cost. Local Benchmark Rates: The India Bullion and Jewellers Association (IBJA) publishes daily benchmark rates twice a day (morning and evening) based on quotes from major bullion dealers across the country. How gold associations in India calculate gold prices? Every morning IBJA collects gold prices separately from 29 different market participants and calculates their average price. This average price is taken by IBJA as the final price of gold in India for that particular day. This average price does not include GST and making charges. IBJA’s 29 physical market participants that separately submit their gold prices are the following: Bullion dealers
Refiners
Importers
Scarp Dealers
Exporters
Jewellers How Gold ETFs work? Do fund managers buy physical gold? A Gold ETF is a financial instrument that tracks the spot price of physical gold. Common man can buy and sell ETF units on stock exchanges just like shares. Do ETF fund managers have to buy real physical gold? Yes. Regulations require fund managers of Gold ETFs and Gold Mutual Funds to buy physical gold against the money invested by retail investors. Each Gold ETF unit represents a specific quantity of physical gold (typically 1 gram or a fraction of a gram) of 99.5% purity. Mutual fund companies store this physical gold in secure bank vaults managed by independent custodians. Every rupee invested in a Gold ETF is 100% backed by actual physical gold held in vaults. Gold ETF investment flows since May 2026 Data from the Association of Mutual Funds in India (AMFI) shows that despite the initial outflow in May 2026, retail and institutional investment demand rebounded sharply in Gold ETFs in June and stayed positive in July, showing strong interest in paper gold. Gold Price Changes: May 2026 vs Today According to benchmark rates from the India Bullion and Jewellers Association (IBJA), gold prices have risen steadily between May 2026 and late August 2026. Gold prices in India have actually risen by 5% after PM Modi had initially urged citizens to avoid unnecessary purchases back in May 2026.