Gold imports by India, the world's biggest market for the precious metal, could drop for a third straight year in 2010 as record high prices scare off traditional buyers. Traders expect to spot the first sign of this trend at next week's Hindu festival of Askhay Tritiya, when demand usually jumps because it is considered an auspicious time to buy jewellery and coins. "Forget buying for the festival, on the contrary people are selling," said Suresh Hundia, president of the Bombay Bullion Association in Mumbai. "There is a queue of sellers."
Gold is up 12.6 percent so far this year to record levels on investors' fears that a $1-trillion rescue package to prevent a Greek debt crisis from spreading to other euro zone states would eventually fail, or stoke inflation. On Friday the metal was heading for its fourth consecutive weekly rise, matching a run that ended in late November. Gold stood at $1,234.40 an ounce by 0636 GMT, up $2.57 from New York's Thursday notional close, but off Wednesday's record of $1,248.15.
Traders say many Indians are responding by buying smaller quantities to maintain the same expenditure, or recycling old jewellery. Those who can afford to spend more may wait for prices to stabilise before they buy. "Demand has turned to zero in the last four days," Hundia added. "Last year for the festival about 12 tonnes was sold. If prices stay like this, there will be very little sold." After Akshay Tritiya, demand may spurt only for the festivals of Ganesh Chaturthi in September and Dhanteras in November.
