Gold Sales Down in India as Festival Season Ends

Gold purchases in India, the world's largest bullion consumer, slowed down as the festival season ended, and business was lackluster elsewhere in Asia as concerns of global growth weighed on sentiment.

The rupee, which declined about 7 percent in November and is one of the worst performers among Asian peers this year, is partly blamed for dwindling gold sales in India.

Demand has slowed down after Diwali because in rupee terms it is still expensive, said Pinakin Vyas, assistant vice president with IndusInd Bank, a large gold importer. Only need-based buying is there, he added.

Rupee-priced bullion hit a record high of 91,321.29 rupees per ounce Thursday and eased to below 90,000 rupees Friday, while dollar-denominated gold traded above $1,740, or about 9 percent below its record high of $1,920.30 hit in September.

Physical buying elsewhere in Asia slowed to a trickle, after prices rose above $1,700 an ounce. Buyers were hesitant to build stockpiles ahead of the year end, especially as concerns spread about stalled global growth and turmoil in financial markets.

People are worried about the economy and don't want to have cash tied up in inventories, said Dick Poon, manager of precious metals at Heraeus in Hong Kong, There is not much activity even after premiums fell slightly.

Premiums for kilo bars were between 50 cents and $1.50, compared with $1-$1.50 last week, dealers said.

The market is very quiet, and we are only seeing some investment buying, said a Hong Kong-based dealer, but added that potential buying interest is still around the corner, awaiting price dips.

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