With such scarcity, Indian buyers may have to succumb paying hefty premiums for supplies, since the demand is going to be high in the festive season.
Several gold-supplying banks have cut back on their shipments to India amid ongoing festive season, news agency Reuters 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 are in favour of focusing on China, Turkey and other markets that could potentially offer better premiums.
The same report goes on to mention that this move could then create a scarcity in the world’s second-biggest gold market. With such scarcity, Indian buyers may have to pay hefty premiums for supplies, since the demand is going to be high in the ongoing festive season.
Some of the names of leading gold suppliers mentioned in the report include ICBC Standard Bank, JPMorgan and Standard Chartered. These suppliers usually import more gold around the festive season and then store it in vaults to meet the demand as and when the need arises.
A Mumbai-based vault official told Reuters, “Ideally a few tonnes of gold should be there in vaults during this time of the year. But now we only have a few kilos.”
As the premiums issue comes in the limelight, it must be noted that in India, premiums over the international gold price benchmark have come down to $1-$2 an ounce against the approximately $4 this time but in the previous year.
An official, on conditions of anonymity told the news agency, “Buyers in China and Turkey are right now paying a very high premium. There is no comparison when we equate it with the Indian market.”