Supplies drying up in India as gold buying soars

The precious metals trade in India is experiencing a huge hike in demand and is struggling to meet the heavy rush of people buying gold.

Reuters reports that dealers have been taken aback by the surge in interest, despite the fact that demand normally increases when festivals in the country begin in mid-August.

The net result is late deliveries for some buyers, with one dealer at one of the largest gold-selling banks commenting: "The orders are getting fulfilled in ten days. The premiums being quoted by suppliers are up by ten cents to about 95 cents."

The rapid rise of gold buying and the subsequent lack of smooth deliveries has also been attributed to summer vacations in Europe and a sudden pick up in worldwide demand.

Afshin Nabavi, senior vice-president at MKS Finance S.A., a large Geneva-based supplier to India, added: "The demand started out of the blue. With the holidays it is difficult to meet all the demand."

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