MUMBAI Gold and silver traders in India, the world's biggest buyer of bullion, scrambled for supplies as they braced for strong sales for a local festival, pushing premiums higher, bank officials and suppliers said.
"People who were left out 50,000 rupees ($1,118.5) are rushing in to buy at 60,000-70,000 looking at 100,000 rupees," said Mayank Khemka, managing director, Khemka Group of Companies, referring to silver. "I am doubtful whether demand will sustain after Akshaya Tritiya."
India will celebrate Akshaya Tritya, a gold buying festival, on Friday, followed by the wedding season that will last through May.
Premiums on silver jumped to 25-30 cents on an ounce over London prices from a normal of 15 cents, while suppliers charged a premium of $1.8 an ounce on gold.
"Premiums are 30-40 cents more than normal at $1.5/1.8 an ounce," said the dealer, adding "there are a few orders in the range $1,490."
Traders said interest in silver rose as prices declined 21 percent from their peak of 73,600 rupees per kg.
Part of the supply problem was also attributed to a strike at Air India, which ships some bullion consignments internally. An ongoing strike by a section of pilots in the state-run airline has crippled domestic operations as it has been forced to curtail around 90 percent of its domestic flights.
"Supply is weak because of Air India strike. Premiums have jumped $2 (an ounce)," said Haresh Acharya, head of bullion desk, Parker Agrochem, an Ahmedabad-based wholesaler.
At 3.35 p.m. the most-active gold for June delivery on the Multi Commodity Exchange (MCX) was trading 0.46 percent lower at 22,030 rupees, down 3.35 percent from the record high of 22,856 rupees struck on April 30.
The World Gold Council (WGC) expects demand to rise for the festival season, with medallions, bars and the exchange traded funds, expected to be the top pick for the upcoming festival.
Being a time-tested investment asset class, gold has helped investors preserve and increase the value of their wealth, the WGC said earlier this week.
(Reporting by Siddesh Mayenkar; Editing by Sunil Nair)