New Delhi: Ahead of major festivals gold-supplying banks reduced shipments to India in order to focus on China, Turkey and other markets where better premiums are available, three bank officials and two vault operators informed.

The move could bring scarcity in the world’s second-biggest market of gold and force Indian consumers to pay hefty amounts for supplies in the ongoing festive season.

However, leading gold suppliers of India- ICBC Standard Bank, JPMorgan and Standard Chartered – usually import more gold ahead of festivals and store it in vaults.

But the sources on Tuesday revealed that vault currently hold less than 10% of the gold.

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One Mumbai-based vault official said: “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.”

On asking about the coming gold scarcity In Indian market, JPMorgan, ICBC and Standard Chartered refused to comment over it.

In India, premiums over the international gold price benchmark slid to $1-$2 an ounce, against around $4 this time last year.

Chanda Venkatesh, managing director of Hyderabad-based bullion merchant CapsGold, said, “Premiums were driven sharply lower by a now-closed loophole that led some Indian trading houses to import gold as lower-tariff platinum alloy, allowing some to even offer gold at a discount.”

“Banks will sell where they will get a higher price,” said a Mumbai-based official with a leading bullion-supplying bank.

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“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,” said the official, who declined to be named due to the bank’s policy.

It is noted that India’s gold imports in September fell 30% from a year ago to 68 tonnes, while Turkish gold imports soared 543%. China’s net gold imports via Hong Kong jumped nearly 40% to a more than four-year high in August.

Indians are celebrating Dussehra, Dhanteras and Diwali in October, which is considered an auspicious time for gold purchase.

Thin vault stocks could force Indian buyers to pay hefty premiums to secure supplies, said a Mumbai-based bullion dealer with a bank.

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