Global tensions impact India’s Gold and Diamond Market

A diamond necklace is displayed during a jewellery exhibition in Srinagar, Jammu and Kashmir, on May 21, 2026. The ongoing Middle East conflict is affecting India’s gold and diamond economy through rising prices, supply-chain disruptions, and weaker consumer demand, according to industry reports and trade data. India, one of the world’s largest gold importers and a global hub for diamond polishing, is facing pressure as geopolitical tensions drive up crude oil prices and disrupt international trade routes.

Higher oil prices have weakened the Indian rupee and increased import costs for gold and precious stones. Reuters reports that India’s trade deficit widened sharply in April 2026 as oil imports surged due to the conflict, while gold imports jumped by 84 per cent.

The conflict has also disrupted the Gulf market, a key destination for Indian jewellery retailers and exporters. Earlier this month, Indian Prime Minister Narendra Modi urged citizens to cut fuel consumption by using public transport, working from home, limiting overseas travel, and postponing gold purchases, as rising global energy prices continue to pressure the country’s foreign exchange reserves.