To Focus On China and Turkey Gold Suppliers Cut Back Shipments To India Report

New Delhi : In this festive season of India, the price of gold can touch the sky. The main reason for this is that foreign banks have cut the supply of gold to India. Banks supplying gold have cut shipments to India ahead of major festivals to focus on China, Turkey and other markets. These banks say that they get better premium on gold in countries like China, Turkey. Three bank officials and two vault operators gave this information to Reuters.

A cut in the supply of gold to India could lead to a shortage of gold in the Indian market. India is the second largest gold market in the world after China. If the supply of gold in the Indian market does not come properly, then Indian buyers may have to pay a heavy premium on the purchase of gold this festive season. Simply put, gold can become more expensive.

Sources said on Tuesday that ICBC Standard Bank, JP Morgan and Standard Chartered are India's major gold suppliers. These suppliers usually import more gold before festivals and keep their vaults full. But now less than 10% of the gold is left in their safes. This is the same gold they imported a year ago. "Ideally there should be a few tonnes of gold in the safes during this time of the year. But now we have only a few kilos left," said a Mumbai-based vault official. JP Morgan, ICBC and Standard Chartered declined to comment on the issue for now.

The price of gold in India was around $ 4 above its international benchmark price at this time last year, which has now come down to $ 1 to 2 an ounce. Whereas in China, the largest market of gold, the premium on gold is $ 20-45. Gold demand continued even after the COVID lockdown in China. Whereas in Turkey, the premium on gold is $80 per ounce. Large-scale inflation in Turkey has led to a rapid increase in gold imports.

"Banks will sell where they get a higher price," said a Mumbai-based official of a leading bullion supply bank. "Buyers in China and Turkey are paying a very high premium right now. There is no comparison when we compare it with the Indian market," the official said. India's gold imports in September fell 30% from a year earlier to 68 tonnes, while Turkish gold imports rose 543%. China's net gold imports through Hong Kong jumped nearly 40% in August to a four-year high.

Indian people will celebrate Dussehra, Diwali and Dhanteras in October. Buying gold on these festivals is considered auspicious. These festivals are followed by the wedding season, which is one of the biggest gold buying seasons in India.