India's gold import restrictions trigger a panic buying spree, Goldman Sachs: Gold prices still expected to reach $5,400 by the end of the year

The more restrictions, the more frantic the buying.

According to the latest report from India’s Economic Times, the Indian government recently introduced a series of gold import restrictions, which not only failed to suppress demand but also triggered panic buying of wedding jewelry across the country. Meanwhile, Goldman Sachs precious metals analyst Lina Thomas reiterated that the gold price target for the end of the year remains unchanged at $5,400 per ounce.

The cause of the situation is the sharp depreciation of the Indian rupee. Due to disruptions in energy supplies in the Middle East, India, as the world’s third-largest oil importer, was hit hardest, with large amounts of foreign exchange flowing out, causing the rupee to fall to historic lows. The Reserve Bank of India was forced to intervene by selling dollars to stabilize the currency. To further stabilize the exchange rate, the Modi government first called on the public to reduce gold purchases and outbound travel, then sharply increased gold import tariffs, and a few days later directly limited gold imports, warning that more emergency measures were being studied to protect foreign exchange reserves.

The result was counterproductive.

“Rose 15% to 20% in two days”: a buying frenzy sweeps across India

According to India’s Economic Times, the panic gold-buying wave has spread nationwide.

Jewelry merchants say consumers are worried that policies will tighten further, so they are rushing to buy ahead of the peak wedding season in June. The core logic driving this rush is simple: if they don’t buy now, it may be more expensive later, or they might not be able to buy at all.

Rajesh Rokde, chairman of the All India Gem and Jewelry Domestic Council, said: “In the past two days, sales of wedding jewelry have been 15% to 20% higher than the usual daily average.”

The scope of the buying spree has gone beyond just wedding needs. Varghese Alukkas, managing director of Jos Alukkas, a chain jewelry retailer with 65 stores, said: “Some people are even buying gold in advance for weddings from November to December because they are worried the government might ban gold purchases.”

At Zaveri Bazaar, Mumbai’s largest gold jewelry wholesale market, traders estimate that sales have increased by about 20% over the past two days. Senco Gold’s managing director and CEO Suvankar Sen described the mood in the market: “Rumors are flying everywhere. Some say import tariffs will rise, others say GST will be increased from the current 3%. This uncertainty is prompting consumers to buy wedding jewelry in advance.”

He added that about 60% of current purchases are related to the upcoming wedding season, with the rest being stockpiled for winter events.

Surendra Mehta, secretary of the Indian Bullion and Jewelry Association (IBJA), said more directly: “Both B2B and B2C transactions are happening; the market is experiencing panic buying. Gold is deeply rooted in Indian culture, and consumers buy wedding jewelry to hedge against potential future tariff hikes or cash purchase restrictions.”

Goldman Sachs: Year-end target of $5,400, but caution needed in the short term

While retail buying is surging, Goldman Sachs precious metals analyst Lina Thomas reaffirmed her long-term bullish stance on gold in the latest report, maintaining a year-end target of $5,400 per ounce by 2026.

However, the analyst also pointed out that central bank gold purchases have slowed—though the slowdown is less than previously expected. Goldman Sachs’ updated 12-month moving average (12MMA) forecast model shows that in March, central banks bought an average of 50 tons of gold per month, up from the previous estimate of 29 tons. Lina Thomas expects central bank gold purchases to rebound throughout 2026, reaching an average of 60 tons per month.

Thomas’s reasoning is: surveys indicate that global underlying demand for gold remains strong, and recent geopolitical developments will further reinforce central banks and private investors’ diversification strategies.

But Thomas also issued a short-term risk warning. The report notes that gold is highly liquid, and if private investors face liquidity pressures—such as a stock market decline amid rising interest rates and weakening growth expectations—gold is often among the first assets to be sold. In other words, gold may be under short-term pressure, but Goldman Sachs’s overall outlook for the end of the year remains unchanged.

Stricter restrictions, more active gray channels

Historical patterns show that when governments try to control capital outflows by restricting precious metals, it often backfires: once formal markets are limited, demand shifts to informal channels, and gold smuggling activities increase.

Analyses also suggest that if traditional channels for buying gold and silver remain blocked, India may ultimately follow the path of other developing countries under financial repression, turning to illegal currencies like Bitcoin, stablecoins, and other substitutes to preserve value.

Risk warning and disclaimer

        The market carries risks; investments should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions herein are suitable for their particular circumstances. Invest accordingly at their own risk.