Disruption of flights in Europe has hit gold shipments to India, the world’s top buyer of the precious metal, potentially pushing up local prices ahead of a gold-buying festival next month, traders and dealers said.
“Shipments are getting delayed as sizeable gold is being imported from that part of the world,” said Pinakin Vyas, assistant vice-president with Mumbai-based IndusInd Bank, a large gold importer.
India buys gold mostly from the UK and Europe, Zurich in particular, but air traffic in the region remains disrupted following last week’s volcanic eruption in Iceland which has thrown up a plume of ash.
Flights were set to resume on Tuesday under a deal to free up airspace but strengthened eruptions from the volcano threatened to unravel the plans.
India’s gold demand has soared since mid-April, an auspicious period for Hindu weddings, raising sales but depleting stocks.
“As of now, no one has kept big inventory,” Vyas said.
This may lead to a scarcity as stocks are required to meet demand for the gold-buying local festival, Akshaya Tritiya, on May 16, dealers said.
“Shipments have been stopped and it will disrupt supplies at least for a week ahead of a good season,” a senior executive with a foreign bank, which supplies gold to India, said.
“The shortfall could be of 6-10 tonnes because orders are already in process and have reached the airport,” the executive said.