Several gold-supplying banks have cut shipments to India during the current festive season, Reuters news agency reported citing bank officials and vault operators. Ahead of major festivals in India, some people familiar with the matter told Reuters that many of these banks favored focusing on China, Turkey and other markets that could potentially offer better premiums.
The same report then mentions that this decision could then create a shortage on the world’s second largest gold market. With such scarcity, Indian buyers might have to pay high premiums for supplies as demand is going to be high during the current festive season.
Some of the major gold suppliers mentioned in the report include ICBC Standard Bank, JPMorgan and Standard Chartered. These vendors typically import more gold during the holiday season and then store it in vaults to meet demand as and when needed.
A Mumbai-based vault official told Reuters: “Ideally a few tonnes of gold should be there in the vaults at this time of year. But now we only have a few kilos left.
While the issue of premiums is in the limelight, it should be noted that in India premiums to the international benchmark price of gold have fallen to $1-$2 per ounce from around 4 $ this time but the year before.
An official, on condition of anonymity, told the news agency: “Buyers in China and Turkey are currently paying a very high premium. There is no comparison when you equate it to the Indian market.