Indian Prime Minister Narendra Modi has urged Indians to avoid buying gold for at least a year as a measure to reduce pressure on India's foreign exchange reserves.
The unusual call comes as India faces economic pressure from the conflict in the Middle East and rising global energy costs that have widened the country's trade deficit and weakened the rupee.
Modi also urged Indians to reduce fuel consumption and limit non-essential foreign travel to help reduce foreign currency outflows.
India is one of the world's largest importers of gold, with the precious metal making up the second-largest import component after crude oil. High reliance on gold imports has put significant pressure on the country's trade balance as global prices rise.
Gold also plays an important role in Indian culture and economy as it is often used as a form of store of wealth and is an important symbol in weddings and religious festivals.
However, the local market is seen to have started to react negatively to the call when shares of Indian jewelry companies recorded a sharp decline on Monday.
Titan Company, India's largest jewelry maker, fell about 6.6%, while Senco Gold Ltd. and Kalyan Jewellers India Ltd. fell about 10.8% and 9.5%, respectively.
Meanwhile, Indian banks are also reportedly facing difficulties importing gold due to administrative bottlenecks. This situation is expected to help ease pressure on India's trade balance in the short term.
