India, May 18 -- In a rare public appeal that blended economic urgency with cultural sensitivity, Prime Minister Narendra Modi urged Indians this month to postpone gold purchases for at least a year, framing restraint as a patriotic act to safeguard the nation's foreign exchange reserves. Days later, on May 13, the government followed with a sharp policy response: more than doubling import duties on gold and silver to 15 percent from 6 percent.

The moves come as India grapples with a double blow to its external accounts with surging oil prices triggered by escalating tensions in West Asia and persistent demand for gold, a metal deeply embedded in the country's weddings, festivals and household savings. With the rupee touching record lows...